Casual, not wanting to pick fight, but I reckon you miss Ryan's point. In your example, shareholder wealth is not increased in total by buy-back, but the value of the individual shares held by each shareholder is increased. You are mistaking the overall value of the economic entity for the value of each shareholding. They should technically be the same equation, but when a buy back is undertaken, shares are removed from the market, and the value of remaining shares increases (per shares) because the value of the economic entity has remained unchanged but is now divided amoung fewer shares. Companies do buy backs in fact, primarily to increase the value of their shares.
- Forums
- ASX - By Stock
- OZL
- a share buy back
a share buy back, page-52
-
-
- There are more pages in this discussion • 18 more messages in this thread...
You’re viewing a single post only. To view the entire thread just sign in or Join Now (FREE)