Why is an announcement of a share repurchase considered a positive signal?
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By choosing to do a share repurchase, management credibly signals that they believe the stock is undervalued
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The announcements of a share repurchase considered a positive signal, because they offer new information, often called a signal.
“share repurchase program ” is when a company buys its shares back from current shareholders through the open stock market.
It offers about a company's future and hence its share price.
One well-known positive signal in a buyback is that management seems to believe that the stock is undervalued and is often viewed as an efficient way to put money back into its shareholders’ pockets.
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