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To: Yamakita who wrote (148042)11/26/1999 12:12:00 AM
From: Chuzzlewit  Read Replies (1) | Respond to of 176387
 
Yamakita, transactions involving the stock of the company are considered capital structure changes -- not earnings or expenses. So they don't appear on the income statement but they do appear in the owner's equity section of the balance sheet. Unfortunately, they are not explicitly detailed. You can get some significant details on most of the transactions in the 10-K, but it's tough to ferret out what you need.

2) how companies can invest in options (that is, in their own company) at all, since they have by definition the best information among the entire pool of investors. Why isn't that considered inside information?

Good question! I don't know the answer. I have pointed out before that a company trading in its own stock raises serious ethical questions because it pits itself (the ultimate insider) against the owners (shareholders). If it is buying stock because it believes the stock is undervalued isn't the selling shareholder at a disadvantage?

I believe that the only ethical reason for a company to sell stock is because it needs the cash for operations; conversely, the only reason to repurchase stock is to return unneeded capital to the shareholders. But that can be done just as easily, and more fairly, in the form of a dividend (although it is not as tax-efficient).

TTFN,
CTC