자사주 포함 관행이 시가총액 및 주당지표에 미치는 영향

Market capitalization (cap) is typically determined by multiplying price per share by the number of outstanding shares, excluding treasury shares. Nevertheless, a common practice in Korea has been, and still is, to include treasury shares in market cap. Such practice not only inherently overstates the true magnitude of the market cap by the amount of repurchased shares but also distorts earnings per share (EPS), price earnings ratio (PER), and other per share indicators or price multiples. This study is the first to examine how the practice of including treasury shares affects market cap and other indicators. Our results suggest that the reported market cap is overstated by roughly 6% on average in the Korean capital market. EPS is understated by 3.6%, and PER is overstated by 4.2%. We also recreate 5x5 test portfolios based on the Fama-French three factor model after appropriately excluding treasury shares, and find that up to 20% of constituent stocks may be different for certain test portfolios. These results suggest that Korean academics and practitioners should seriously reconsider the current practice of including treasury shares in calculating market cap and start excluding them to be more consistent with the theory and international practice.