Chapter 8
Put Your Money Where Your Mouth Is
Why Certain Financial Actions Affect Share Prices and Others Don’t
In This Chapter
- Actions (signals) speak louder than words.
- The message in dividends and stock splits.
- Share buybacks: the myth and reality.
- What do managers’ share purchases and sales signal?
What is common to dividend increases or decreases, share buybacks, financial leverage changes, share purchases and sales by company executives, and stock splits? Not much, except that they are managerial actions, in contrast with the previously discussed communications, like conference calls, pro forma earnings, or guidance, in part aimed at changing investors’ perceptions regarding the company’s prospects. Such actions, which economists have ...
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