Which statement about a "share buyback" is correct?
A)The EPS of the company will decrease after a share buyback.
B)Share buy-back decreases the information asymmetry for investors.
C)It is an administratively cumbersome way to award stock compensation.
D)Accounting is the same whether repurchased shares are cancelled or not.

Question

Quizplus · Accepted Answer

Share buy-back can decrease information asymmetry for investors because it signals the management's confidence in the company's future prospects, suggesting that they believe the stock is undervalued. This can provide investors with positive information about the company's valuation and future performance.

Which Statement About a "Share Buyback" Is Correct