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Strategies & Market Trends : Value Investing
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To: Brendan W who wrote (6485)3/31/1999 9:24:00 AM
From: James Clarke  Read Replies (2) of 78512
 
<<Wayne, it is my understanding that dividends and share repurchases both decrease aggregate book value. They are a return of capital and decrease the equity. My accounting is not good enough for me to tell you what the accounting transactions would be. I think it decreases the equity dollar for dollar (a dollar repurchased is a dollar decrease in book value).>>

Now take that one more step and we've got it. The transaction also retires a share. Book value per share is what we're trying to figure out. It seems clear now that if you buy back shares above book value, BVPS goes down, and if you buy back shares below book value BVPS goes up.

jjc
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