buybacks,but they do not always follow through. In fact,companies fail
to complete about 25 percent of authorized open-market buyback pro-
grams within three years of the announcement.
8
Just as voters are wary
of the politician’s pledge, investors realize that an announced program
is not the same as a completed program.
Another reason that the buyback signal is weaker relates to the three
methods that companies use to buy back their shares:
• Open-market purchases. In this buyback method, the most widely
used by far, companies simply repurchase their own shares in the
open market, as any other investor would. Although open-market
purchases have legal restrictions—such ...