Share repurchases convey information to investors that the shares are underpriced.

Question

Quizplus · Accepted Answer

When a company chooses to repurchase its shares, it is an indication that the company believes the shares are undervalued. This can signal to investors that the company has confidence in its future earnings and growth potential, which can increase demand and drive up the share price. Therefore, share repurchases can convey information to investors that the shares are underpriced.

Share Repurchases Convey Information to Investors That the Shares Are