Drawback of stock repurchases, Finance Basics

Drawback of Stock Repurchases

1. High price

A company may find it not easy to repurchase shares at their recent value and price paid may be higher to the detriment of remaining shareholders.

2. Market Signaling

Despite director's effort at trying to convince markets or else, a share repurchase may be interpreted because a signal suggesting such the company lacks proper investment opportunities. This may be interpreted like a sign of management failure.

3. Loss of investment income

The interest such could have been earned from investment of additional cash is lost.

Posted Date: 1/31/2013 2:50:41 AM | Location : United States

Related Discussions:- Drawback of stock repurchases, Assignment Help, Ask Question on Drawback of stock repurchases, Get Answer, Expert's Help, Drawback of stock repurchases Discussions

Write discussion on Drawback of stock repurchases
Your posts are moderated
Related Questions
Three of these companies have bonds that carry investment - grade ratings. The other 3 companies carry junk - bond ratings. Judging by the information in the table, which 3 compani

Advantages of Bonus Matter a) Tax advantages         Shareholders can sell new shares, and create cash in form of capital gains such is tax exempt unlike cash dividends wh

Question   Clifton-Peters Ltd is a manufacturer of household goods located in Melbourne. They presently make and wholesale fruit juicers, blenders and baking equipment. The Gen

You are taking an investment in the common stock of Crisp's Cookware. The stock is expected to pay a dividend of $2.00 a share at the end of the year (D1=2.00). The stock has a bet

Question: Suppose that a security is presently selling for a price of $65, the nominal interest rate is 8%, and the security volatility is 0.15. a) Determine Delta of a Euro

Define two instances of Efficiency Ratio, Liquidity Ratio, Leverage Ratio? 1. Define two instances each of 'Efficiency Ratio', 'Liquidity Ratio', 'Leverage Ratio' and 'Prof

How to calculate the present value of assignment??

Asset Based Valuation - Example K and K Company Limited is planning to absorb three other companies so as to realize its sales records of Sh.500, 000 per annum.  Its accountan

If banks expect an unusually large increase in withdraws from checking deposit accounts in the near future, what would happen to the federal funds rate, borrowed reserves and nonbo