목차
1.What is “buyback?”
2.Reasons for stock buyback
3.Stock
buyback pros
4.BCIA & ADP
5. Stock Buy back: Who benefits the
most?
본문
Shareholders may prefer that free cash flowsbe
distributed to them as dividends, so they can control how the cash is invested.
Share repurchases during the 1960s and 1970s did increase stock
prices, but this effect have nearly disappeared since 1980s. Some companies have
spent millions to repurchase their shares, only to see the stock price drop
significantly after the buyback program ends.
(ex) Dell
Computer.
When a company buys back its own stock, there are many
advantages to the investor. However, there is a major advantage of stock
buybacks to the company managers.
The first reason is that upper
management typically will receive compensation that is tied to the company stock
price. What this means is that they typically make more money when the stock
price goes up. This compensation may come in the form of stock options, rights
or other forms.
In the short term management believes that dividends may
work against the stock price of a company by reducing the book value of the
stock. In addition, if managers have stock options, they do not immediately
benefit from dividends as their options do not qualify for dividend
payments.
On the other hand, when a stock buyback occurs the short term
implications on the stock price are typically positive (due to the previous
listed reasons). And, since this allows management to see the most immediate
results to their compensation, it is no wonder that managers prefer stock
buybacks as opposed to dividend increases.
본문내용
traded stock
in the open
market, its called a buyback.
Reasons for stock
buyback
.
Reason 1
The company possesses a large sum of money and
considers the stock
buyback as a way of distributing it to its shareholders.
Reason 2
The second reason is to temporarily increase the financial
ratios such as EPS (earnings per share) and PE (price earnings)
Reason 3
The third reason for buybacks is to |
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