Financial structure or dividend policies, Finance Basics

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Every time a listed company does a share buyback, investors and media alike would debate fiercely on the merits of such a scheme. There are investors who prefer buybacks to high dividends payments and vice versa. Proponents of both schemes position themselves to share price increases as their proof that such schemes increase shareholder value.

Required:

Describe how shareholders' value is enhanced by information asymmetry rather than by a change in financial structure or dividend policies. Support your argument with empirical evidences.


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