Which of the following is NOT a motivation for a firm to undertake a share repurchase?
A)Offsetting the exercise of executive stock options
B)Repurchase of shares from dissident shareholders
C)Pay free cash flows to shareholders without generating an expectation of continued dividends
D)To indicate that the management feels the stock is overvalued

Question

Quizplus · Accepted Answer

Undertaking a share repurchase is typically seen as an indication that management believes the stock is undervalued, not overvalued. Therefore, option D is the answer as it contradicts the typical motivation for a share repurchase.

Which of the Following Is NOT a Motivation for a Firm