REPURCHASE OF SHARES In the past two decades‚ major U.S. corporations have increasingly repurchased significant amounts of their own common shares. The reasons for this development and its implications for the theory of share valuation and public policy‚ however‚ have been subject to numerous‚ and often conflicting‚ interpretations. The repurchase of shares is not legal under all codes of law; but in the countries where it is legal‚ it opens up a variety of opportunities for gains for the stockholders
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Share repurchases and the protection of shareholders* KATHLEEN VAN DER LINDE** 1 Introduction From a creditor’s perspective there is not much difference between the payment of a dividend in respect of a share and a payment for the acquisition or repurchase of that share. However‚ from the point of view of the shareholder a dividend is a return on capital while a repurchase is a return of capital to the vendor shareholder. Share repurchases change the structure of the company’s share capital
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react if Gainesboro repurchased its shares? Should Gainesboro do so? Repurchasing shares or share buyback: – Open market repurchases (buy over time as other investors) – Tender offer (buy shares at a precise date) – Targeted repurchase (buy from major shareholder There are ways for shareholders to receive cash without being paid dividends. A firm can buy back some of its shares with the advantage being that most investors are not taxed as heavily on shares sold as they are on dividends received
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CHAPTER 14 DISTRIBUTIONS TO SHAREHOLDERS: DIVIDENDS AND SHARE REPURCHASES (Difficulty: E = Easy‚ M = Medium‚ and T = Tough) Multiple Choice: Conceptual Easy: Dividends versus capital gains Answer: d Diff: E [i]. Myron Gordon and John Lintner believe that the required return on equity increases as the dividend payout ratio is decreased. Their argument is based on the assumption that a. Investors are indifferent between dividends and capital gains. b. Investors
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CHAPTER 14: DISTRIBUTIONS TO SHAREHOLDERS: DIVIDENDS AND SHARE REPURCHASES 1. The optimal distribution policy strikes that balance between current dividends and capital gains that maximizes the firm’s stock price. a. True b. False ANSWER: True 2. Other things held constant‚ the higher a firm’s target payout ratio‚ the higher its expected growth rate should be. a. True b. False ANSWER: False RATIONALE: The higher the payout ratio‚ the less of its earnings the firm reinvests in the business
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Dell Computer Corporation – Share Repurchase Program Questions: 1. Why do companies use stock options to compensate employees? What are the advantages of stock options relative to cash compensation? What‚ if any‚ are their disadvantages? 2. What‚ if any‚ risks do Dell’s shareholders face from Dell’s stock option program? Draw terminal payoff diagrams to illustrate the risk. Is this risk something that shareholders of Dell expect to bear when investing in Dell? 3. How does Dell
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on Share Repurchase Proposal of Blaine Kitchenware Inc. Group 7 Contents Executive Summary 3 Overview of problems 3 Analysis on Capital Structure & Payout Policies of Blaine 3 1. Inappropriate current capital structure and payout policies 3 2. Advantages and disadvantages of large share repurchase proposal 4 a. Effects of share repurchase on assets‚ liabilities and equity on balance sheet 5 b. Effects of share repurchase on debt ratios and interest coverage ratio 5 c. Effects of share repurchase
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In the article “The New Science of Cute” written by Neil Steinberg of The Guardian‚ Steinberg elaborates on the subjectivity of cuteness and how the concept of cuteness has developed over period of time. In the article‚ Steinberg incorporates scientific facts‚ historical data‚ and real-life examples to expand on how and the reason behind the public’s reaction to cuteness and how cuteness is used in the commerce. To begin with‚ Steinberg states about the cultish popularity of Kumamon – Yuru-Kyara
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Saul Bass: The Game Changer Vicente Mendez | Saul bass: The Game Changer Designers are always influential to the world in their works. Saul Bass was one designer who stood out. He took his talents to their limits and redefined design with his works. Not only was he a great graphic designer‚ but the reigning master of film title design. He changed and redefined the art of graphic design. Saul had many innovations‚ breakthroughs and discoveries‚ and theories and philosophies. Movies often
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Stock repurchase is a special type of dividend. If there were no separate tax treatments between ordinary income and capital gains‚ and if a proportionate number of the shares were acquired from all stockholders‚ the economic effects would be almost identical for stock repurchase as for a cash dividend. If the stock is not acquired proportionately from all investors‚ stock repurchase is a special type of dividend‚ since it goes only to the stockholders who prefer cash compared to increased ownership
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