Can management take advantage or be abusive in buying share back?

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Expert Solution

to eleborate this contention that management take advantage of be abusive in buying back sahre, below are the contention to agree with this point.

shares of a public limited company is free transferable and open for purchase for everyone from open market or stock exchanges. then first question come in my mind that if any one can buy share from open market then why companies make buy back offer.

A stock buyback is a transfer of value from one party to another. I don't like stock buybacks because they can pit investors in the same company against one another, or they can reward the executives of a company at the expense of all shareholders.

in most of cases stock buy back ratio depends upon number of shares tendered and number of shares application received , therefore in this case management can take advantage of this situation since they have higher holding in company then ratail share holders and can tender higher numbers and get benefited.

ekkarill92 answered 10 months ago

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