Share repurchase

• Company purchase of its own common shares from investors in the stock market; the company then retires the shares; desired effects of share repurchases are that they enhance shareholder value and/or help to discourage unfriendly takeovers.

• A company's own plan to buy back its own shares from the marketplace, reducing the number of outstanding shares, and typically an indication that the company's management thinks the shares are Undervalued.

• Occurs when a company buys its own shares on the open market. Sometimes, it is done to bolster value, at other times it is executed to acquire shares for option or other incentive plans. When the rationale is the former, it is often considered preferable to use available to reinvest in the business than make other less apparently attractive investments or dividend distributions. These activities reduce the number of shares outstanding and therefore increase the earnings per share statistic.

• Program by which a corporation buys back its own shares in the open market. It is usually done when shares are undervalued. Since it reduces the number of shares outstanding and thus increases earnings per share, it tends to elevate the market value of the remaining shares held by stockholders.

 Embedded terms in definition
 Buy back
Common shares
Earnings per share
Incentive plans
Market value
Outstanding shares
Stock market
 Related Terms

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