In a taxless world with no brokerage costs, repurchases and dividends have the same effect on shareholder wealth. In the real world, however, repurchases provide more preferable tax treatment than dividends to ordinary investors. Does this mean that firms should always use share repurchases so that investors can gain from this tax benefit? No Yes In general, are stock repurchases a feasible substitute for the payment of cash dividends? In other words, will a firm either pay a cash dividend or repurchase its shares, but never do both? Yes No