Share repurchase programs are a method for corporations to return funds to shareholders. According to Moyer, et al., from 2004 to 2011, companies in the Standard & Poors 500 stock index (S&P 500) spent $2.7 trillion on repurchases and only $1.8 trillion on dividends (Section 15-6, para. 2). Thus, it is critical that investors understand the mechanics and advantages and disadvantages of stock repurchase programs. Prior to beginning work on this discussion forum, read of the text, with particular attention to sections 15-6 a through h, and read the following articles:
For the initial post,
- If your last name begins with A through L, form an argument that stock repurchase programs are a good capital allocation strategy that benefit all shareholders.
- If your last name begins with M through Z, form an argument that stock repurchase programs are a bad capital allocation strategy that benefit insiders and executives to the detriment of outside shareholders.
In your post (with a minimum of 300 words):
- Explain why a company might implement a stock repurchase program.
- Explain one research study that supports your position (as assigned above, by your last name). For guidance on this see the tip sheet and
- Include a link to the study in your post.
- Explain the implications of this question for management considering implementing a stock repurchase program.
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