Abstract
Buyback programs are often used by firms for different purposes, including distributing excess cash to shareholders and signal that the stock price is underpriced. The first purpose of this chapter book is to review studies of buyback programs and to highlight that fundamentals-based hypotheses are problematic in financial turmoil. We will show how buyback programs add value to shareholders while also identifying some situations in which they can destroy value. The second purpose is to present the pros and cons of buyback programs to shareholders, particularly during financial turmoil.
Type
Publication
Handbook of investment analysis, portfolio management and Financial derivatives, 1(1)
