Which of the following statements is correct? Capital gains earned in a share repurchase are taxed less favorably than dividends; this explains why companies typically pay dividends and avoid share repurchases. Very often, a company's stock price will rise when it announces that it plans to commence a share repurchase program because a repurchase attnouncement usually is seen as a positive signal from management. Stock repurchases increase the number of outstanding shares. The clientele effect is the best explanation for why companies tend to vary their dividend payments from quarter to quarter. If a company has a 2 -for-1 stock split, its stock price should roughly double