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
Klose Outfitters Inc. believes that its optimal capital structure having of 60% common equity and 40% debt, and its tax rate is 40%. Klose have raise additional capital to fund its

John has just retired & she is running out of cash. Her finanical planner advises her to do reverse mortage to improve her standard of living. The current market value of her self

The construction of a highway is broken into 14 activities as shown in the following table. Draw a bar chart of this construction project. Activity ID Desc

Advantage of Joint Stock Companies The company can own assets and incur liabilities on its own accord. Perpetual existence as or going to relate that allows the compan

Foreign Trade Balance If the Government buys or imports much more than it sells or exports there will be a trade deficit such will require financing.The most important source

Internal finance can avoid the agency costs of debt and equity finance. In practice it is the most important source of funding.   (a)  Discuss potential problems of internal finan

The director of capital budgeting for a firm has identified two mutually exclusive projects, A and B, with the following expected net cash flows: Expected Net Cash Flows Year

Weighted Average Cost of Capital Weighted Average Cost of Capital or WACC is also called the overall or composite cost of capital. Since various capital components have diffe

I need report on Corporate Finance. Do you provide help in topic Corporate Finance? I need expert's assistance to solve my college assignment. Please suggest if it works for me.

Accept or Reject Rule of NPV Under this method, a company should accept an investment venture if N.P.V. is positive that is if present value of cash outflows exceeds such of c