Examining the effect of share repurchase announcements on returns, and determining the factors affecting share repurchase decisions: An exercise on Borsa İstanbul

Share repurchase method, which is one of the most important instruments used within the scope of dividend distribution policies, has become exceedingly popular throughout the world in the last thirty years. The share repurchase method supplicates the company to repurchase its own shares from the market and thereby reduce the number of shares in circulation. In this way, the firm increases the earnings per share and thus enables the shares of the firm to gain value, thus allowing the shareholders who do not sell their shares to obtain capital gains. Although an instrument practiced in the world markets for the past thirty years, and is now becoming more and more popular, share repurchases in Turkey however, has started to be implemented after 2009. Following a decision taken at the end of 2009, a limited number of companies were given the opportunity to buy back shares, and after the new TCC entered into force on 1 July 2012, the obstacles preventing the companies to repurchase their shares are lifted and the number of companies that are willing to buy back their shares increased each year. Within the scope of this study, addressing share repurchase and examining them from varied dimensions was targeted. Accordingly, share repurchase announcements made at Borsa Istanbul were analyzed. In the study, issues such as "which factors are effective in firms' decision to buy shares" and "how the market reacts to companies' share repurchase announcements have been tried to be identified respectively. As a result of the study, it has been determined that some financial ratios such as ownership level, intangible asset level and profitability level are effective for companies to take share purchase decision. In addition, the findings of the study show that market abnormal returns are generated as a result of share repurchase announcements.