Which of the following motivates corporations to enter into stock repurchase programs?
A) Favorable impact on EPS
B) Expected favorable impact on stock price
C) To modify the firm's capital structure
D) All of the above

Question

Quizplus · Accepted Answer

All of the given choices can motivate corporations to enter into stock repurchase programs. Repurchasing company stock can increase earnings per share (EPS) by reducing the number of shares outstanding. It can also signal to investors that the company believes its stock is undervalued, potentially leading to an expected favorable impact on stock price. Finally, stock repurchase can be used to modify the firm's capital structure, such as reducing the amount of cash on hand or adjusting the debt-to-equity ratio.

Which of the Following Motivates Corporations to Enter into Stock