Newsletter-21

236 NEWSLETTER 2016 with these shares, as well as transaction date, before the opening of the session in the first business day following the date of transaction. 9. Buy-back share transactions shall not be considered as in- sider trading or manipulation. Global Overview In the countries following the Anglo-Saxon legal system, such as the United States and the United Kingdom, share buy-backs are more free and widespread, and are often seen as an extension of the non-dividend cash payments and capital repayment policy. The reason behind the share buy-back may be increasing earnings per share, or the signaling of future cash flows 5 . When the managers believe that their shares are trading below their intrinsic value that does not reflect the actual situation, in order to eliminate the price gap, share buy-backs may show positive expecta- tions. In practice, a sudden increase in the share values of compa- nies that announce their share buy-back programs is frequently seen. However, Apple’s share buy-back made before the stock drop caused the company to lose USD 15 billion. In some cases, announcing buy- backs, instead of new investments, may send a message of fatigue, that management has no new ideas of how to use the cash, other than giving it back to the shareholders 6 . Recently, Facebook announced that they would buy back shares worth USD $6 billion, starting from the first half of 2017, with the authorization of the U.S. Securities and Exchange Commission (SEC), and their share values increased by 1% after the announcement 7 . The 5 For detailed information on the reasons behind the buy-back shares, please refer to: John B. SHOVEN - Laurie Blair SIMON , Share Repurchases and Acquisi- tions: An Analysis of Which Firms Participate, National Bureau of Economic Research, Working Paper No:2243, 1987. http://www.nber.org/chapters/c2057. pdf (access date: 30.12.2016). 6 Please see: http://fortune.com/2016/02/02/apple-stock-buyback/ (access date: 30.12.2016). 7 Please see: https://www.bloomberg.com/news/articles/2016-11-18/facebook-to- buy-back-up-to-6-billion-in-shares-starting-2017 (access date: 30.12.2016).