The Strategies and Power of Financial Communication in Share Buyback Plans

During challenging economic scenarios, marked by macroeconomic instability, regulatory changes and market volatility, the companies listed on B3 have been resorting to different strategies to protect and generate shareholder value, in which share buyback plans are among the most used tactics for this purpose. 

Considering this, MZ, who is constantly seeking to empower IR professionals by offering cutting-edge technology, exceptional customer service, and disseminating relevant content, released its Study on Material Facts and Notice to the Market on Share Repurchases in 2024, mapping 147 documents on repurchases filed with the CVM by 105 companies in 20 different sectors. This data not only reveals corporate behavior regarding capital management but also exposes the growing relevance of precise and strategic financial communication.

More than a market transaction, share buyback programs carry a narrative that needs to be told intelligently. This is where Investor Relations professionals act, being an essential instrument for translating intentions, aligning expectations and preserving, or even leveraging, a company’s reputation. 

An X-Ray View of Share Buybacks in 2024

Between January and December 2024, 147 share buyback programs were registered with the Brazilian Securities and Exchange Commission (CVM), most under Material Facts (79.6%), and others classified as Notices to the Market (20.4%). December was the month with the highest number of registrations, showing that many companies wait until the last quarter as a way to signal strength, confidence and planning for the coming year.

The Retail sector had the highest number of companies reporting share buybacks, followed by the Technology and Financial Services sectors. In terms of market value, 53.2% of companies had valuations ranging from R$1 billion and R$10 billion, indicating that share buybacks are not exclusive to market giants. Additionally, 71.4% of companies belonged to the Novo Mercado segment, reinforcing the correlation between good governance practices and share buyback strategies as a way of returning value to shareholders.

Another relevant fact was that 61.2% of the filed documents were related to the start of share buyback programs. This shows that companies have a clear intention of repositioning themselves in the market, a narrative that needs to be well constructed and communicated to be effective. The average number of common shares intended to be repurchased in each program was 24.1 million, and the Financial Services sector had the largest volumes, with a total of more than 103 million common shares scheduled for repurchase.

In addition, 48.7% of the share buyback programs indicated an intention to repurchase from 1% and 5% of the total floating shares, a moderate but significant signal, particularly since 81% of companies actually made changes to their treasury shares, mostly during the month of December.

All this plays out against a challenging backdrop

It is important to contextualize this movement within the performance scenario of listed shares in 2024. The companies that filed share buyback documents had an average share performance of -11.2%, even lower than the Ibovespa (-10.4%). Despite the challenging scenario, the decision to carry out share buybacks has become a company’s sign of resilience and confidence, as it believes in the intrinsic value of its shares and uses share buybacks as a way of demonstrating this to the market.

In this case, share buybacks are used as a signaling mechanism, a classic concept by Michael Spence, where, in general terms, the market interprets a buyback as a message: the company considers its shares to be undervalued, it has sufficient liquidity, and it believes in future share price appreciation. This is a movement that, when properly communicated, can reduce the risk premium required by investors and, therefore, directly contribute to reducing the company’s cost of capital.

Communication as the foundation of the share buyback strategy

If the share buyback is being used as a financial strategy, the way it is communicated should be treated as a market strategy. In this sense, IR professionals play an absolutely central role. It is not good enough to just announce a share buyback — it is necessary to contextualize, justify, align expectations and convey security.

In a negative average return scenario, as in 2024, precise and transparent communication can make the difference between reinforcing investor confidence and deepening a company’s risk perception. IR professionals need to explain why the share buyback makes sense at that given time, the rationale behind this decision and how it aligns with the company’s strategic planning.

Efficient communication always reduces the cost of capital

Cost of capital is determined by several factors, including investors’ perceived risk for a company. This risk, in turn, is sensitive to how the company communicates with the market. When IR professionals properly conduct this communication, it reduces information asymmetries, increases predictability and, consequently, reduces the returns required by investors.

This is where the strategy and narrative combination proves to be powerful. A poorly explained share buyback may simply look like an attempt to manipulate prices or indicate a misuse of cash. On the other hand, when a share buyback program is supported by strong communication, based on data, fundamentals and strategic goals, the market responds positively, either by increasing the share’s value or through greater share stability during volatile periods.

In this case, share buybacks are not just a financial tactic — they are part of an integrated view aimed at creating value. Yes, the company carries out a share buyback, but it communicates, justifies and takes responsibility for this movement. This reduces noise and increases the market’s understanding of where the company is headed.

Furthermore, by positioning itself clearly and coherently, the company reinforces its institutional reputation, which also contributes to a more favorable environment for attracting capital in the long term. Institutional investors, in particular the foreign ones, value transparency, governance and alignment of interests — and all of these elements must be ultimately communicated.

It is during this scenario that IR professionals stand out as strategic agents. They act as a bridge between the company’s actions and what the market understands. In times where companies are pressured to deliver results, having a precise, consistent and proactive financial communication becomes a valuable asset.

Conclusion

MZ’s study on the share buyback programs, filed with the CVM in 2024, brings much more than statistics — it reveals a collective movement in the Brazilian corporate market towards more strategic capital management practices aligned with shareholder interests. At the same time, it highlights how financial communication plays a leading role for reducing asymmetries, building trust and reducing cost of capital.

In a scenario with a negative average return on shares, companies that decided to carry out share buybacks signaled not only confidence in their fundamentals, but also a commitment to generating value. However, this commitment is only effective if it is understood, and that is when IR professionals play a key role. They transform data into speech, actions into messages, and strategies into narrative.

More than ever, share buybacks and earnings communication need to walk hand in hand. The first without the second may seem opportunistic or be ineffective; the second without the first risks being empty. But together, they form a powerful tool for positioning, differentiation and attracting capital. In a world where capital is expensive, companies who know how to better communicate are one step ahead of the game.

We hope to have assisted by bringing information on this Study, which we consider very important for companies and the IR ecosystem. To learn more, click here and access the Study page. If you have any questions, we are always here at your service!😉

External Communications and MZ Research Team

About MZ

MZ (www.mzgroup.com.br) is the largest and leading independent global player in investor relations (IR) solutions.

Founded in 1999, the Company has surpassed the mark of 2,000 websites published, currently serving over 800 companies and investment management firms listed on 12 stock exchanges.

To empower IR strategies, MZ delivers innovative technologies and exceptional customer service, ensuring long-term partnerships.