Impact of Share Buyback on Earnings Per Share (EPS) - An Empirical Study on Malaysian Listed Companies

Wee Pat Pang

doi:doi:10.11648/j.ijber.20221101.14

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Impact of Share Buyback on Earnings Per Share (EPS) - An Empirical Study on Malaysian Listed Companies

Wee Pat Pang

Published in International Journal of Business and Economics Research (Volume 11, Issue 1)

Received: 11 January 2022 Accepted: 4 February 2022 Published: 16 February 2022

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Abstract

The notion of intention of share buyback by companies has been an increasingly popular subject of study by researchers in Malaysia and the developed economies. In particular, the impact of share buybacks on boosting the Earnings per Share (EPS) of companies has gained much attention. It is recognized that the influence of board decisions in carrying out share buybacks by concentrated ownership companies has a direct impact on the increase of EPS. To establish the actual effects of increase in EPS due to share buybacks, this study adopted Margaret Horan’s model of segmentation of EPS to determine the actual increase of EPS from companies’ operations. This study focuses on companies buying back more than 5% of shares, as the basis of analysis. The findings do not support any evidence that share buybacks contribute to an increase of EPS of companies. Adopting Margaret’s model criteria of at least RM 0.01 increase in EPS as effective increase, only 40% of companies from a sample of 15 companies had recorded actual increase in EPS. The findings may not be conclusive due to its relatively small sample size but it does provide an indication that the increase in EPS may not be solely due to effects of share buybacks. Perhaps future studies are encouraged to adopt another method of segmentation of EPS with larger sample size in determining share buyback’s actual impact on companies’ EPS.

Published in	International Journal of Business and Economics Research (Volume 11, Issue 1)
DOI	10.11648/j.ijber.20221101.14
Page(s)	23-31
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Share Buybacks, Earnings Per Share (EPS), Segmentation, Treasury Shares, Frequency, Behavior, Efficient Market Hypothesis (EMH)

References

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APA Style

Wee Pat Pang. (2022). Impact of Share Buyback on Earnings Per Share (EPS) - An Empirical Study on Malaysian Listed Companies. International Journal of Business and Economics Research, 11(1), 23-31. https://doi.org/10.11648/j.ijber.20221101.14

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ACS Style

Wee Pat Pang. Impact of Share Buyback on Earnings Per Share (EPS) - An Empirical Study on Malaysian Listed Companies. Int. J. Bus. Econ. Res. 2022, 11(1), 23-31. doi: 10.11648/j.ijber.20221101.14

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AMA Style

Wee Pat Pang. Impact of Share Buyback on Earnings Per Share (EPS) - An Empirical Study on Malaysian Listed Companies. Int J Bus Econ Res. 2022;11(1):23-31. doi: 10.11648/j.ijber.20221101.14

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@article{10.11648/j.ijber.20221101.14,
  author = {Wee Pat Pang},
  title = {Impact of Share Buyback on Earnings Per Share (EPS) - An Empirical Study on Malaysian Listed Companies},
  journal = {International Journal of Business and Economics Research},
  volume = {11},
  number = {1},
  pages = {23-31},
  doi = {10.11648/j.ijber.20221101.14},
  url = {https://doi.org/10.11648/j.ijber.20221101.14},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20221101.14},
  abstract = {The notion of intention of share buyback by companies has been an increasingly popular subject of study by researchers in Malaysia and the developed economies. In particular, the impact of share buybacks on boosting the Earnings per Share (EPS) of companies has gained much attention. It is recognized that the influence of board decisions in carrying out share buybacks by concentrated ownership companies has a direct impact on the increase of EPS. To establish the actual effects of increase in EPS due to share buybacks, this study adopted Margaret Horan’s model of segmentation of EPS to determine the actual increase of EPS from companies’ operations. This study focuses on companies buying back more than 5% of shares, as the basis of analysis. The findings do not support any evidence that share buybacks contribute to an increase of EPS of companies. Adopting Margaret’s model criteria of at least RM 0.01 increase in EPS as effective increase, only 40% of companies from a sample of 15 companies had recorded actual increase in EPS. The findings may not be conclusive due to its relatively small sample size but it does provide an indication that the increase in EPS may not be solely due to effects of share buybacks. Perhaps future studies are encouraged to adopt another method of segmentation of EPS with larger sample size in determining share buyback’s actual impact on companies’ EPS.},
 year = {2022}
}

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TY  - JOUR
T1  - Impact of Share Buyback on Earnings Per Share (EPS) - An Empirical Study on Malaysian Listed Companies
AU  - Wee Pat Pang
Y1  - 2022/02/16
PY  - 2022
N1  - https://doi.org/10.11648/j.ijber.20221101.14
DO  - 10.11648/j.ijber.20221101.14
T2  - International Journal of Business and Economics Research
JF  - International Journal of Business and Economics Research
JO  - International Journal of Business and Economics Research
SP  - 23
EP  - 31
PB  - Science Publishing Group
SN  - 2328-756X
UR  - https://doi.org/10.11648/j.ijber.20221101.14
AB  - The notion of intention of share buyback by companies has been an increasingly popular subject of study by researchers in Malaysia and the developed economies. In particular, the impact of share buybacks on boosting the Earnings per Share (EPS) of companies has gained much attention. It is recognized that the influence of board decisions in carrying out share buybacks by concentrated ownership companies has a direct impact on the increase of EPS. To establish the actual effects of increase in EPS due to share buybacks, this study adopted Margaret Horan’s model of segmentation of EPS to determine the actual increase of EPS from companies’ operations. This study focuses on companies buying back more than 5% of shares, as the basis of analysis. The findings do not support any evidence that share buybacks contribute to an increase of EPS of companies. Adopting Margaret’s model criteria of at least RM 0.01 increase in EPS as effective increase, only 40% of companies from a sample of 15 companies had recorded actual increase in EPS. The findings may not be conclusive due to its relatively small sample size but it does provide an indication that the increase in EPS may not be solely due to effects of share buybacks. Perhaps future studies are encouraged to adopt another method of segmentation of EPS with larger sample size in determining share buyback’s actual impact on companies’ EPS.
VL  - 11
IS  - 1
ER  -

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Author Information

Wee Pat Pang

Faculty of Business, International University of Malaya and Wales, Kuala Lumpur, Malaysia

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Plain Text BibTeX RIS

APA Style

Wee Pat Pang. (2022). Impact of Share Buyback on Earnings Per Share (EPS) - An Empirical Study on Malaysian Listed Companies. International Journal of Business and Economics Research, 11(1), 23-31. https://doi.org/10.11648/j.ijber.20221101.14

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ACS Style

Wee Pat Pang. Impact of Share Buyback on Earnings Per Share (EPS) - An Empirical Study on Malaysian Listed Companies. Int. J. Bus. Econ. Res. 2022, 11(1), 23-31. doi: 10.11648/j.ijber.20221101.14

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AMA Style

Wee Pat Pang. Impact of Share Buyback on Earnings Per Share (EPS) - An Empirical Study on Malaysian Listed Companies. Int J Bus Econ Res. 2022;11(1):23-31. doi: 10.11648/j.ijber.20221101.14

Copy | Download

@article{10.11648/j.ijber.20221101.14,
  author = {Wee Pat Pang},
  title = {Impact of Share Buyback on Earnings Per Share (EPS) - An Empirical Study on Malaysian Listed Companies},
  journal = {International Journal of Business and Economics Research},
  volume = {11},
  number = {1},
  pages = {23-31},
  doi = {10.11648/j.ijber.20221101.14},
  url = {https://doi.org/10.11648/j.ijber.20221101.14},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20221101.14},
  abstract = {The notion of intention of share buyback by companies has been an increasingly popular subject of study by researchers in Malaysia and the developed economies. In particular, the impact of share buybacks on boosting the Earnings per Share (EPS) of companies has gained much attention. It is recognized that the influence of board decisions in carrying out share buybacks by concentrated ownership companies has a direct impact on the increase of EPS. To establish the actual effects of increase in EPS due to share buybacks, this study adopted Margaret Horan’s model of segmentation of EPS to determine the actual increase of EPS from companies’ operations. This study focuses on companies buying back more than 5% of shares, as the basis of analysis. The findings do not support any evidence that share buybacks contribute to an increase of EPS of companies. Adopting Margaret’s model criteria of at least RM 0.01 increase in EPS as effective increase, only 40% of companies from a sample of 15 companies had recorded actual increase in EPS. The findings may not be conclusive due to its relatively small sample size but it does provide an indication that the increase in EPS may not be solely due to effects of share buybacks. Perhaps future studies are encouraged to adopt another method of segmentation of EPS with larger sample size in determining share buyback’s actual impact on companies’ EPS.},
 year = {2022}
}

Copy | Download

TY  - JOUR
T1  - Impact of Share Buyback on Earnings Per Share (EPS) - An Empirical Study on Malaysian Listed Companies
AU  - Wee Pat Pang
Y1  - 2022/02/16
PY  - 2022
N1  - https://doi.org/10.11648/j.ijber.20221101.14
DO  - 10.11648/j.ijber.20221101.14
T2  - International Journal of Business and Economics Research
JF  - International Journal of Business and Economics Research
JO  - International Journal of Business and Economics Research
SP  - 23
EP  - 31
PB  - Science Publishing Group
SN  - 2328-756X
UR  - https://doi.org/10.11648/j.ijber.20221101.14
AB  - The notion of intention of share buyback by companies has been an increasingly popular subject of study by researchers in Malaysia and the developed economies. In particular, the impact of share buybacks on boosting the Earnings per Share (EPS) of companies has gained much attention. It is recognized that the influence of board decisions in carrying out share buybacks by concentrated ownership companies has a direct impact on the increase of EPS. To establish the actual effects of increase in EPS due to share buybacks, this study adopted Margaret Horan’s model of segmentation of EPS to determine the actual increase of EPS from companies’ operations. This study focuses on companies buying back more than 5% of shares, as the basis of analysis. The findings do not support any evidence that share buybacks contribute to an increase of EPS of companies. Adopting Margaret’s model criteria of at least RM 0.01 increase in EPS as effective increase, only 40% of companies from a sample of 15 companies had recorded actual increase in EPS. The findings may not be conclusive due to its relatively small sample size but it does provide an indication that the increase in EPS may not be solely due to effects of share buybacks. Perhaps future studies are encouraged to adopt another method of segmentation of EPS with larger sample size in determining share buyback’s actual impact on companies’ EPS.
VL  - 11
IS  - 1
ER  -

Copy | Download