Impact of Share Repurchase Programs on Valuation – Study Valuation Changes following Buyback Announcements

Abstract

This study investigates the short-term impact of share repurchase (buyback) announcements on corporate valuation for a selected sample of eight major global corporations during the 2023-2024 period. Employing an Event Study Methodology with a 5-day event window (t-2 to t+2), the research analyzes Cumulative Abnormal Returns (CAR) to determine if buyback announcements serve as a statistically significant signal of undervaluation. The analysis focuses on a refined sample of eight companies Apple, Meta, Disney, Alibaba, Uber, Alphabet (Google), General Motors, and Caterpillar to isolate the announcement effect from broad market volatility. The study finds a statistically significant Average Cumulative Abnormal Return (ACAR) of 4.91%, with a T-statistic of 2.51. While individual results exhibited heterogeneity, ranging from +11.39% for Meta Platforms to -4.28% for Caterpillar, the aggregate findings support the Signaling Hypothesis and Agency Cost Theory. The results provide empirical evidence that, in the absence of adverse sector-specific shocks, share repurchases serve as an effective strategic tool for generating immediate shareholder value and signaling financial maturity.