International Journal of Business and Applied Social Science

ISSN: 2469-6501 (Online)

DOI: 10.33642/ijbass
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Call for Papers: VOL: 10, ISSUE: 12, Publication December 31, 2024

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VOLUME: 8; ISSUE: 11; NOVEMBER 2022

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Articles

Author(s): Paul C. Schauer
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Abstract:
Common theories as to why companies purchase their stock include signaling to the market the stock is selling at a discount, using treasury stock for the issuance of contingent shares, as a substitute for dividends, and increasing earnings per share. These theories are tested by examining the treasury stock transactions from 2016 to 2021 of the 100 largest companies in the S&P 500. Although each of these motivations has merit, the results show that none provides a dominant cause for the purchase of treasury shares. An alternative cause is proposed.
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