Companies are more apt to choose repurchases over dividends if doing so will enable them to I.take advantage of a market undervaluation of their shares.
II)maintain or increase the value of executive stock options.
III)offset the dilution created by the exercise of executive stock options.
IV)distribute revenue increases that are considered to be temporary or short-term in nature.

Question

Quizplus · Accepted Answer

Companies may prefer repurchases over dividends for several reasons: I) Repurchasing undervalued shares can be a good investment, signaling to the market that the company believes its stock is undervalued. II) Repurchases can increase the value of existing shares, benefiting executives with stock options. III) They can be used to counteract the dilutive effect of executive stock options. IV) Repurchases offer flexibility to distribute temporary revenue increases without committing to ongoing higher dividends.

Companies Are More Apt to Choose Repurchases Over Dividends If