Buy Back of Shares and their impact on Liquidity: An Analytical Study of Selected Sectors in India

Abstract

Shares buy back have become a company event in the financial market worldwide. Buyback program the company distributes the excess cash flow among the shareholder by way of repurchasing its own shares, generally at premium .India shares buy back were introduced in 1999 has receive and attention of all major companies .Since then there has been a spate of  announcement of share buy backs. Small investors in India also need  to  know whether  they  will  benefit by will participating in the buy -back offer or they will be better off in the post buy back phase companies acquire their own shares to improve earnings   per share by reducing the number of shares .Share buy backs by their very nature decrease the total number of shares .Outstanding with fewer shares outstanding after a buy back and assuming that buy back does not adversely affect the company earning ,the per share effect of the remaining  shares will  increase.