The relationship between share buybacks and performance during the COVID-19 pandemic

As a result of the restrictions imposed in Turkey after the pandemic was declared by the World Health Organization (WHO) on March 11, 2020, many companies came to the point of stopping their production and many companies were affected by this situation. In addition, as a result of inflation caused by the depreciation of the Turkish lira (TL), panic and chaos in the capital markets caused many companies to be priced below their fundamental values. For this reason, some public companies may consider that the value of their shares is much lower than it should be and take the action of collecting shares that have previously been offered to the public in order to contribute to the formation of healthy prices in the market. Within the scope of this study, the share buybacks that took place during the pandemic period will be examined, the purchase window will be determined empirically by the event study method, and whether the company has experienced a decrease in value in the market will be examined with the help of the market model. In addition, the reasons that led the company management to decide on the share buyback program and the subsequent price movements on returns were tried to be explained by using financial and economic indicators and multiple linear regression analysis. The purpose of the study is to follow the development of companies' share prices before and after the pandemic. For this reason, 2049 notifications published by all public companies regarding repurchased shares, accessed through the Public Disclosure Platform (KAP) between January 1, 2018 and August 1, 2022, were taken into account. As a result of this study, it is seen that the value of many companies was negatively affected before the buyback program during the pandemic period. An increase in value has been observed between the price of companies performing share repurchase activities before collecting their shares and the price after collecting their shares. Concretely, in the statements made to the KAP, it has been determined that the shares of companies making share buybacks provide significantly positive returns compared to market returns.