Which of the following is not a motivation for 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

A share repurchase done to indicate that management feels the stock is overvalued would not be a motivation for a share repurchase. In fact, share repurchases are often done when management feels the stock is undervalued and would benefit from repurchasing shares at a lower price. The other options (A, B, and C) are common motivations for share repurchases.

Which of the Following Is Not a Motivation for a Share