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When a company buys back its stock, it decreases their available publicly traded shares (O'Brien,2020). The foremost reason for a company doing this would be
When a company buys back its stock, it decreases their available publicly traded shares (O'Brien,2020). The foremost reason for a company doing this would be to drive up the price per share. Theprice per share goes up in buybacks because the metrics used to measure share value to determinestock price are spread across a decreased number of shares, so despite a company having the sameearnings, their share value goes up because they have fewer shares outstanding The practice of thesebuybacks in self-serving on behalf of company executives because much of these executives' wealth istied up in their ownership in the company (O'Brien, 2020). This is a way for these executives tomaintain this wealth, still make the shares valuable, and to dodge paying more in dividends. There hasbeen a significant amount of controversy regarding these buybacks, especially as we continue toendure the corona virus pandemic. Airlines engaged in several buybacks of its stock last year andsought over fifty million dollars in federal aid to assist them in sustaining at the same time. Critics saythese airlines need that federal aid to continue these buybacks to maintain shareholder value withoutpaying as much in dividends. Lawmakers even proposed the idea of banning the practice
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