Asked by Tyler Bergh on May 06, 2024
Verified
In the real world, share repurchases are detrimental largely as a result of tax considerations.
Share Repurchases
A process by which a company buys back its own shares from the market, reducing the amount of outstanding stock.
Tax Considerations
The implications of tax laws and regulations on financial decisions and transactions.
- Identify the impact of buying back shares on a company's earnings per share and its equity.
Verified Answer
TB
Trini BrittMay 11, 2024
Final Answer :
False
Explanation :
Share repurchases can actually be tax-efficient for investors, as they allow investors to choose when to realize capital gains, potentially deferring taxes compared to dividends which are taxed as income in the year they are received.
Learning Objectives
- Identify the impact of buying back shares on a company's earnings per share and its equity.