INVESTMENT BANKING
INVESTMENT BANKING
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INDEX
1 Introduction 03
3 Conclusion 08
4 Bibliography 09
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Introduction
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Process of Buyback
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regular basis during the buyback process. This guarantees
accountability to stakeholders and openness.
7. Finalization: The public is informed by an announcement
made when the buyback program comes to an end. This
statement details if authorized shares have been repurchased
or if the program's expiration date has passed.
8. Effect on Financial Statements: The number of
outstanding shares decreases when repurchased shares are
recorded as treasury stock. Since the updated number of
outstanding shares is used to compute financial metrics like
earnings per share (EPS) and return on equity (ROE), this
influences such metrics.
Criticism of Buybacks
Impacts of Buyback
1. Executive Pay: Buybacks have the potential to raise stock
prices, which is beneficial for executives whose pay is based
on success in the stock market or on metrics like earnings per
share (EPS). Higher CEO pay might come from this, which
would raise questions about alignment with shareholder
interests and the possibility of excessive compensation.
2. Investment in Growth: Critics believe that buybacks could
limit a company's capacity for innovation and expansion by
taking funds away from long-term growth initiatives like
capital expenditures or research and development. Future
prospects and the company's ability to compete may be
hampered by this.
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3. Shareholder Value: By raising stock prices and EPS
(earnings per share), buybacks may increase shareholder
value. Buybacks can improve the supply-demand dynamic for
the company's stock by lowering the number of outstanding
shares, which could increase investor returns.
4. Market Perception: The way the market reacts to
buybacks can affect how investors feel about the firm and
how they view it. Reactions to buybacks that are favorable,
such as heightened optimism about the company's financial
standing and prospects, can raise stock prices and sustain
long-term shareholder value. On the other hand, unfavorable
responses could make people wonder about the company's
intentions and capacity for wise capital allocation.
5. Long-Term Value Creation: How well a company
manages its resources and captures growth chances will
determine how buybacks perform in the long run. The
company's capacity to generate sustainable growth and make
strategic decisions will determine if buybacks are sustainable
and contribute to long-term wealth creation, even though they
can offer short-term benefits like EPS growth and stock price
appreciation.
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Conclusion
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Bibliography
Wikipedia
www.investindia.gov.in
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Thank You
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