Share buybacks have become a common event in the financial markets worldwide. In a share buyback program, the company distributes the excess cash flow among the shareholders by way of repurchasing its own shares, generally at a premium. Among the various reasons for doing so, the most prominent one is the fact that the company wants to indicate to the shareholders that it has huge confidence in itself. In India share buybacks were introduced in 1998 and have received attention of all major companies. Since then there has been a spate of announcements of share buybacks. This paper examines empirically the announcement period price reaction and whether management is acting in the best interest of non-tendering shareholders when it engages in targeted share buyback. An exhaustive list of all the financial parameters was considered for the purpose of analysis and the data was collected through online databases. A trend analysis was performed on various parameters like share prices of these companies during and post buyback period. Various performance measures were also used to draw conclusions regarding their trends from pre-buyback to post-buyback period. The study finds that for the Indian corporate, the long-term advantages of share buybacks are not clear. Buyback process is generally used to improve the shareholding of promoters of the company, and with a view to impart short-term gains for the investors. The study points out that buyback norms should be made more stringent for Indian context, if the companies are to have a long-term view. In the end, the study lays down possible directions in which further research could be done on this topic.

Buyback of shares relates to the company buying back its shares which it has issued earlier from the market.1 Interest in share buyback program has grown phenomenally worldwide over the past 20 years. In the US alone, corporate expenditures on share buybacks as a percentage of earnings are ten times higher today than there were in 1980. In the late 1990s, for the first time companies spent more money repurchasing their shares than on paying dividends.2 During this period, US companies announcing share buybacks earned favorable long run returns.

Studies foresee share buyback becoming more common in Europe (Goldman Sachs (1999)). In recent years, countries like the UK and Canada have seen an increase in activity while other nations that previously prohibited buybacks, including Germany and Japan, have adopted provisions to make them acceptable.