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2018•Research Journal of Social Science & ManagementRequires access

A STUDY ON IMPACT OF BUY BACK OF SHARES ON COMPANY EPS P/E RATIO AND MARKET PRICE OF THE SHARES.

sailaja vedala

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Abstract

Share repurchase was evolved as an alternative method of payout and a corporate finance tool in 1950 in the USA. Then, gradually it spread to other countries like UK, Canada, etc. It has achieved a significant growth in the last two decades when compared to dividend payment by companies. Buy back of shares is just the opposite of raising capital through issue of shares. It is a process of capital restructuring which allows a company to buy back its own shares, which were issued by it earlier. Companies go for buy back shares either to increase the value of shares still available, or to eliminate any threats by shareholders who may be looking for a controlling stake. However, in India, a continuous demand has been rising from the corporate sector to buy-back shares in order to increase the rate of earning and also the market price per share for the remaining shares after cancelling a part of the shares.

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What this paper is about

Share repurchase was evolved as an alternative method of payout and a corporate finance tool in 1950 in the USA. Then, gradually it spread to other countries like UK, Canada, etc. It has achieved a significant growth in the last two decades when compared to dividend payment by companies. Buy back of shares is just the opposite of raising capital through issue of shares. It is a process of capital restructuring which allows a company to buy back its own shares, which were issued by it earlier. Companies go for buy back shares either to increase the value of shares still available, or to eliminate any threats by shareholders who may be looking for a controlling stake. However, in India, a continuous demand has been rising from the corporate sector to buy-back shares in order to increase the rate of earning and also the market price per share for the remaining shares after cancelling a part of the shares.

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Available abstract

Share repurchase was evolved as an alternative method of payout and a corporate finance tool in 1950 in the USA. Then, gradually it spread to other countries like UK, Canada, etc. It has achieved a significant growth in the last two decades when compared to dividend payment by companies. Buy back of shares is just the opposite of raising capital through issue of shares. It is a process of capital restructuring which allows a company to buy back its own shares, which were issued by it earlier. Companies go for buy back shares either to increase the value of shares still available, or to eliminate any threats by shareholders who may be looking for a controlling stake. However, in India, a continuous demand has been rising from the corporate sector to buy-back shares in order to increase the rate of earning and also the market price per share for the remaining shares after cancelling a part of the shares.

Key concepts: Share price, Market share, Share repurchase, Restructuring, Business, Dividend, Shareholder, Share capital

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A STUDY ON IMPACT OF BUY BACK OF SHARES ON COMPANY EPS P/E RATIO AND MARKET PRICE OF THE SHARES. — Research Paper | ScholarLens