The Board’s Role in Share Repurchases [MITSloan Management Review]

In many companies, decisions about the level and timing of share repurchases are left mainly to the management. But given their importance, corporate directors should probably pay closer attention.

Capital allocation is a significant function for company directors. How much of the company’s profits gets reinvested in the business rather than distributed to shareholders through cash dividends or share repurchases is a critical decision companies must make. Boards of directors typically approve a dividend policy and precise amounts for each quarter: Everyone knows that cutting the dividend will result in a sharp decline in the share price.

Read the rest at sloanreview.mit.edu…