This research delivers a comprehensive analysis of share buybacks and their diverse implications on corporate financial performance. As critical financial strategies, share buybacks are employed by companies for purposes such as distributing earnings, enhancing financial positions, and capitalizing on undervalued shares.

Our analysis sheds light on why share buybacks significantly affect financial metrics like Earnings Per Share (EPS) and Weighted Average Cost of Capital (WACC). This is accomplished by reducing the number of outstanding shares, which optimizes the company’s capital structure, potentially increasing its appeal to investors.

At last, we assess the varied impacts of share buybacks on financial performance and value creation. We critically examine their widespread application and focus on the notable empirical finding of signaling and its repercussions for equity holders

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Ziyu (Nelson) Qiao, Portfolio Research Analyst, Connect with Nelson on LinkedIn

Vince (Qijun) Chen, Director of Research, Connect with Vince on LinkedIn