10 Advantages of Buyback of Shares
1.Stability and Trustworthiness
Buying shares increases the stability of the company and maintains confidence among investors.
2.Increase in price
Through share purchase, the demand for the company’s shares increases, due to which the value of the shares increases.
Through share purchase, the company buys shares at a fixed price in a fixed time, thereby making a fixed profit to the investors.
Share purchases improve participation, and make investors shareholders in the company.
Share purchase increases the ownership of shareholders, which increases the shareholding.
Buying shares strengthens the financial position of the company and makes investors feel secure.
7.High stock quality
Buying shares improves the quality of the company’s shareholders, which increases the quality of the shares.
Share purchase increases the positivity of the company, which gives self-confidence to investors.
Buying shares maintains the confidence of investors and gives them confidence that the company is concerned about the benefits of its shareholders.
By purchasing shares, the company contributes to social upliftment, thereby creating a positive impact in the society.
10 Disadvantages of Buyback of Shares
Share purchase can have a negative impact on the capitalist outlook of the company, as it gives more profits to the investors and can reduce the number of investors in the company.
2.Loss of status
Share purchase can lead to dilution of the company’s position, as it gives the company high value addition potential.
3.Threat of subsidization
Investors get more benefits by buying shares, which gives them dividends and the company may have to give more subsidies.
4.Increase in debt
The company gets more profit by purchasing shares, but for this it can take loan, which can increase the loan number.
5.Position pump and dump
Share purchases may pose a pump and dump risk to a company’s position, leading to share price volatility.
Share purchase may increase the restrictions of shareholders, which may lead to reduction in shareholding.
7.Loss to investors
Buying shares can cause losses to expert investors, as it can lead to volatility and decline in the value of shares.
Share purchases may increase self-interest in the company’s management, as they may attempt to increase the value of the shares.
Share purchases may lead investors to suspect that the company is buying shares to maintain its financial position.
The company may face social backlash due to share purchase, which can cause negative impact in the society.
We see that despite the many pros of stock buying, it also contains some negative aspects. This can be a challenging business decision, giving the company the opportunity to grow self-sufficiently, but it can also create problems in maintaining relationships with reformed investors.
Therefore, this process should be done carefully and thoughtfully so that there is a balance in the social and economic context and positive outcomes for both the company and the investor.