Does Price React to Fixed Price Tender Offer Share Buyback Announcement?

This paper investigates stock market reactions to share buyback announcements, specifically with the fixed price tender offer mechanism. An event study methodology was used to examine stock price reaction of 30 observations involving 21 listed companies surrounding the announcement dates. Two models, namely market adjusted return (MAR) and the single index market models (SIMM) were utilised to compute abnormal returns. Eventhough most literature in the western market found positive abnormal returns, this study reveals that investors gain zero abnormal returns out of these announcements. The post announcement result shows a zero abnormal return which implies that the Malaysian stock market is semi-strongly efficient due to this announcement. Finally, evidence also shows that none of the implications forwarded in the theories could be supported in this study.