Anali Ekonomskog fakulteta u Subotici (Jan 2015)
Share repurchase in Serbia: Motives and effects
Abstract
The aim of this paper is to indentify the potential relationship between the share repurchase program and stock market index in Serbia; to investigate the most common motives of shares repurchase and to evaluate whether the companies that bought their own shares succeed in trying to protect share prices from the decline. The research covers the period from 2005 to the end of 2010. In the above mentioned period, the total of 61 companies repurchased their own shares and among them 11 companies buyback their shares few times. Analysis showed that companies in Serbia intensified own share repurchase program in 2008 during the lowest value of stock market index which was affected by the financial market crisis. The most common motives for the share repurchase were to protect the market value of the shares and to change the ownership structure. All of these motives were mutually used by the companies in the same time period. The analysis showed that companies did not successed to change the trend of share decline using the share repurchase program during the crises period while companies that used share repurchase several times bought their own shares at the prices that constantly declined. Share repurchase program followed by companies when stock markets are characterized by the constant decline in value of the shares points out societal issues of making a damage to the current, non-speculative investors.
