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Share buy-back

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grover41 | 07:25 Fri 18th May 2007 | Business
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When a company buys back its shares, how does this benefit small shareholders? Are the bought-back shares taken out of circulation or cancelled or does the company pay itself the dividends on the shares it now owns?
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Avatar Image BenDToy
Since you have no other answers, here we go. The shares are taken out of circulation and cancelled. This does not change the value of the company but reduces the number of shares, so the value of each share (in theory) increases in proportion.
00:09 Fri 25th May 2007

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