Open Market Share Repurchase as an Instrument of the Company's Dividend Policy

In emerging capital markets, share repurchase, though more widespread over the last few years and is no longer an exceptional practice as it was before, but by far not as popular as in the West. This can be explained by several reasons: legal restrictions and unfavorable tax treatment on capital gains, imperfect market institutions, and hence a high degree of information asymmetry, capital structure and control of the company by the state or major shareholders, etc. However, in view of the growing interest of companies in developing countries to this method of payment should a more detailed study of the practice of buyback of shares these capital markets. The aim of this work is to determine the response of stock market to the announcement of the reverse redemptions of its own shares on the open market of BRIC companies. This assumes the existence of abnormal returns around the date of the buyback announcement. The study is conducted using the Event Study based on a sample of 291 reports of stock buybacks on the open market during the period 2002-2016 by the example of the BRIC markets. As a result of this testing were positive and statistically significant average cumulative abnormal returns (СAR) on the full sample, including the announcement of the buybacks by companies in the BRIC countries as a whole, and on separate samples by India and Brazil.