Introduction
Companies, in this dynamic environment of corporate finance, do many things to increase the wealth of the shareholders appropriately with the capital they are employing. One such practice is the share buyback, also more popularly known as stock repurchase. Over the past several decades, share buybacks have been very widely popular all around the world and have emerged as a necessary component of financial planning by corporations. So, what is it, and why do businesses do it?
This paper will embrace the concept of share buybacks, defining it, outlining its types, its impact, motivation, taxation considerations, advantages and disadvantages, among other details in real-life examples to understand how this practice works.
What is a Share Buyback?
This is the share buyback as the event where the company buys its shares back from the shareholders. In the most primitive sense, the company invests in itself, whereby this reduces the number of outstanding shares in the public market. This means that the ownership is concentrated among the left-out shareholders, and this can help the financial ratio such as earnings per share.
During the time of cash reserve, companies purchase their stocks, but then believe they are purchasing at a below-market price and thus were repurchased. Alternatively, share repurchase plans constitute one source of alternate payments of dividend and hence the values returned to shareholders.
Types of Share Buybacks
There are different methods by which companies can conduct a share buyback:
1. Open Market Buybacks
In this process, the company purchases its shares directly from the open market. This is the most common and flexible form of buyback and gives the company time to make the purchases at the right times when market conditions are ideal. Repurchase is spread over time to avoid considerable market shock.
2. Tender Offer
The tender offer is where the company offers the shares at a premium through prevailing market price and persuade

Introduction
Companies, in this dynamic environment of corporate finance, do many things to increase the wealth of the shareholders appropriately with the capital they are employing. One such practice is the share buyback, also more popularly known as stock repurchase. Over the past several decades, share buybacks have been very widely popular all around the world and have emerged as a necessary component of financial planning by corporations. So, what is it, and why do businesses do it?
This paper will embrace the concept of share buybacks, defining it, outlining its types, its impact, motivation, taxation considerations, advantages and disadvantages, among other details in real-life examples to understand how this practice works.
What is a Share Buyback?
This is the share buyback as the event where the company buys its shares back from the shareholders. In the most primitive sense, the company invests in itself, whereby this reduces the number of outstanding shares in the public market. This means that the ownership is concentrated among the left-out shareholders, and this can help the financial ratio such as earnings per share.
During the time of cash reserve, companies purchase their stocks, but then believe they are purchasing at a below-market price and thus were repurchased. Alternatively, share repurchase plans constitute one source of alternate payments of dividend and hence the values returned to shareholders.
Types of Share Buybacks
There are different methods by which companies can conduct a share buyback:
1. Open Market Buybacks
In this process, the company purchases its shares directly from the open market. This is the most common and flexible form of buyback and gives the company time to make the purchases at the right times when market conditions are ideal. Repurchase is spread over time to avoid considerable market shock.
2. Tender Offer
The tender offer is where the company offers the shares at a premium through prevailing market price and persuade