Discuss About Share Buy-Backs

Question

Recently Walt Disney, JP Morgan Chase, Best-Buy and many other listed companies have announced massive share buy-backs. The more common method of returning cash to shareholders is through dividends, so what has triggered the sudden rash of repurchases?

In this discussion, you are required to:

1. Examine the major arguments in favour of dividends versus share repurchases (and vice-versa), and briefly comment on the merits of these.

2. Identify and briefly describe a recent (last 12 months) share repurchase, and rationalise why the company chose a buy-back over other alternatives (eg: paying a cash dividend, re-paying debt, investing the cash etc.). Comment on whether you think the buy-back was ‘successful’ or not. The word limit is 750, excluding calculations and references.

Summary

The question belongs to Finance and it discusses about the recent announcements of share buy-backs from Walt Disney, JP Morgan Chase, Best-Buy, etc. This has been discussed in the solution in detail.

Total Word Count 738