The Effectiveness of Share Repurchase Transactions

The work is devoted to the analysis of share repurchase effectiveness on developed and developing capital markets. The study is based on a sample of 1,790 announcements of intention to repurchase shares in the BRICS and the USA in 2010-2016. A positive effect of cash amount, a motive to adjust the capital structure and underestimation of the firm on amount of share repurchase has been found on developed markets. On the sample of developing countries, a significant positive impact on the repurchase amount has underestimation of the firm. Dividend payments are substitutes for repurchase in emerging capital markets. The positive impact of transaction on market reaction has been found. Market reaction is influenced by the following motives of repurchase: in the developed capital markets - the underestimation of the firm as a buy-back motive and the amount of repurchased shares. On developing markets a positive impact of the cash amount and adjusting the capital structure as a motive for repurchase was revealed.