Banks anticipating a takeover by another bank may repurchase some outstanding equity to decrease this takeover threat.

Question

Quizplus · Accepted Answer

Banks (or any company) may repurchase outstanding equity as a strategy to reduce the number of shares available in the open market, making it more difficult and expensive for a potential acquirer to gain a controlling interest, thereby decreasing the threat of a takeover.

Banks Anticipating a Takeover by Another Bank May Repurchase Some