Do share repurchases reverse dilution

Reference no: EM131490774

Question: Before it found the practice to be too expensive, Microsoft (and a number of other firms) was in the habit of repurchasing some of the shares that it issued each year as employees exercised stock options. The rationale, according to commentators, was to avoid the dilution from shares issued to employees.

a. Do share issues from the exercise of employee stock options cause dilution?

b. Do share repurchases reverse dilution?

c. Why would Microsoft feel that repurchasing shares is "too expensive"?

Reference no: EM131490774

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