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
Conditions for Lease Finance Lease finance is ideal within the following circumstances: a) Whenever the asset depreciates faster. b) Whenever the asset is matter to obso

Determinants of Working Capital Needs There are few factors that determine the firm's working capital needs. These factors are comprehensively enclosed with a Textbook of Busi

Question 1: a) What is dependency ratio and why is it important for pensions? b) For which types of schemes is dependency ratio mostly relevant? Explain c) What is the

Payback Period Method - Traditional Methods This method gauges the viability of a venture via taking the outflows and inflows over time to ascertain how soon a venture can pay

Describe how society's interests can influence financial managers. Occasionally the interests of a business firm's owners are not similar as the interests of society.  For exam

Market Model - Methods of Computing Cost of Capital This model is utilized to establish the percentage cost of ordinary share capital cost of equity (K e ). If an investor is

Define and explain the credit multplier

sir could you please tel me what is A/R process.

The Audiology Department at Randall Clinic offers many services to the clinic''s patients. The three most common , along with cost and utilization data, are as follows: Service Var

Investment Analysis Any type of company will invest finance for the sake of deriving a return that is useful for four main purposes as: 1. To reward the owners or shareholder