[Edaily Reporter Kwon Oh Seok ] As the trend toward shareholder return policies has strengthened, the volume of treasury stock purchases by listed companies this year has increased significantly compared to last year. While companies are actively buying back their own shares to boost stock prices and demonstrate their commitment to enhancing shareholder value, analysts suggest that the effectiveness of these shareholder return measures will depend on how the shares are ultimately disposed of, such as through cancellation.

According to the Korea Exchange on the 21st, as of the 19th of this year, the volume of treasury stock reported as acquired by companies listed on the KOSPI, KOSDAQ, and KONEX stood at approximately 20.7859 trillion won. This is 2.5 times the amount reported during the same period last year, which was approximately 8.8730 trillion won. Last year, the actual volume of treasury stock purchases was recorded at 8.7822 trillion won, reflecting market price fluctuations and other factors.
Analysts note that as share buybacks, alongside increased dividends, have established themselves as a primary means of shareholder returns, companies are utilizing them with increasing frequency. Recently, MIRAE ASSET SECURITIES(006800)announced on the 17th a plan to acquire 3000억 won worth of its own shares. This is three times the previous largest amount of 1030억 won, with the company planning to acquire △2000억 won worth of common stock, △100억 won worth of Class 1 preferred stock, and △900억 won worth of Class 2 preferred stock. MIRAE ASSET SECURITIES plans to cancel all of the shares acquired in this transaction.
Prior to this, major domestic financial holding companies—including △WooriFinancialGroup (200억 won), △ShinhanFinancialGroup Co.,Ltd. (700억 won), △Meritz Financial Group (900억 won), and △KB Financial Group (1조 200억 won)—have been launching large-scale share buybacks one after another since the beginning of the year, driving the overall expansion of such purchases. The financial holding sector is considered a leading industry that not only has relatively high capital capacity but also reacts sensitively to the government’s calls for increased shareholder returns.
The market points to changes in the policy environment as the backdrop for this trend. With the current administration strengthening its policy stance to encourage corporate value enhancement and expanded shareholder returns, companies are actively engaging in share buybacks to take the initiative. Share buybacks are considered a preferred tool for companies because they can be executed quickly and send a positive signal to the market.
In fact, announcements of share buybacks often have a positive impact on stock prices. As the number of shares outstanding decreases, earnings per share (EPS) and share value rise, and investors interpret this as a signal that the company views its current stock price as undervalued. Consequently, observers predict that companies will likely continue to announce share buybacks in an effort to improve investor sentiment.
However, there are also many who point out that it is difficult to assume that an expansion of share buybacks will immediately lead to tangible shareholder returns. This is because the effect may be limited if the acquired shares are held without being retired or used as funds for employee compensation or operational purposes. Prior to the passage of the Commercial Act amendment in March of this year—which mandated the cancellation of treasury stock—some companies acquired shares only to hold them for extended periods or use them for other purposes, thereby diluting the expected shareholder return effect.
Experts emphasize that shareholder returns are only truly realized when the acquisition of treasury stock leads to its cancellation. Lee Jun-seo, a professor in the Department of Business Administration at Dongguk University, analyzed, “Given the trend toward mandatory treasury stock cancellation driven by the government’s policies to enhance shareholder value and the amendment to the Commercial Act, it can be seen that companies have embarked on treasury stock buybacks to strengthen shareholder returns,” adding, “Excluding exceptions such as employee compensation, these buybacks are premised on cancellation.”
Hwang Hyun-young, a research fellow at the Korea Capital Market Institute, also noted, “Above all, what matters most is companies’ efforts to enhance shareholder value through voluntary treasury stock cancellation,” adding, “Companies are urged to take a more proactive approach to enhancing shareholder value by canceling their own shares.”