Reference no: EM133736263

Question: From an accounting perspective, there are several reasons proffered that may lead to management's decision to execute a share repurchase. Reasons given as to why a firm's management might repurchase some of its stock (i.e., acquire treasury stock) include: (1) to reissue the shares to officers and employees under bonus and stock compensation plans, (2) to increase trading of the company's stock in the securities market in the hopes of enhancing its market value, (3) to have additional shares available for use in the acquisition of other companies, (4) to reduce the number of shares outstanding and, thereby, increase earnings per share, or (5) to avoid a takeover of the company by investors that are hostile to management (Kimmel et al., 2016) and to distribute excess cash to shareholders (Sodhi et al., 2023)).

Upon reviewing these management and/or accounting-aligned reasons for stock repurchases, which one would you offer is most prevalent among U.S. firms?