The Nexus between Buyback, Business Cycle, and Stock Market Volatility

Foued Hamouda¹, Rabeb Riahi¹ and Tarek Sadraoui^2,

¹University of Gabes, Higher Institute of Management, Gabes, Tunisia

²Quantitative Methods, Faculty of Economics and Management, Mahdia, Tunisia

Cite this paper:
Foued Hamouda, Rabeb Riahi and Tarek Sadraoui. The Nexus between Buyback, Business Cycle, and Stock Market Volatility. International Journal of Econometrics and Financial Management. 2020; 8(2):61-65. doi: 10.12691/ijefm-8-2-3

Abstract

Financial crisis shows significant uncertainties in corporate financing conditions. This study draws on economic conditions toask if buyback programs are related to the business cycle and the stock market volatility. The results show both unidirectional and bidirectional causality between buyback, business cycle and stock market volatility. It also shows that financial crisis plays an important role, suggesting that firms increase their buyback depending on their economic condition.

Keywords:
stock repurchases business cycle stock market volatility nonlinear causality granger causality

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