what are a few reasons related to the share buyback or repurchase of shares by companies?

Finance Dec 28, 2020

Expert Solution

Share buy back is a method by which company buys it's own share from investors. This is done to reward share holders by providing them premium price than prevaling market price

Reasons for buyback

- To reward investors

- To boast value of shares . By buyback , total number of outstanding shares decreases and hence EPS per share increase thereby increasing value of share

- To improve financial position

- To colsolidate ownership

- To use unused cash : Cash lying ideal can be costly and hence it should be distributed either through buyback or dividend

- To boase goodwill of the company

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