Ellie Kahn AIS 100 Section 9 Current Event 4 1. If I were a shareholder I would not want the company to engage in stock buybacks. This is because it would mean that the company has run out of other options and has nowhere else to invest their money. In the long run this would not be good because it means that the company is turning away from growth and that when the economy goes back up, they will not be any stronger or any more profitable. Along with that, the company may be using the stock buyback in order to make their financial statements look better and are creating a lack of transparency to stockholders and investors. Stock buybacks are risky and it is often hard to know the right situation in which to use a stock buyback. 2. One benefit of a stock buyback is that it reduces the number of shares outstanding, leading to an increase in earnings per share. Another benefit is that stock buybacks create in increase in the stock price in the short-term. 3.
This is the end of the preview.
access the rest of the document.