Before we start to discuss the details of HTC’s stock buyback policy, we should know, why do general companies decide to use the stock buyback policy? Do they want to give investors some good information about them? Or do they want to gain more money and raise their stock price? Later on we will discuss the reasons that the company wants to executive this kind of policy in the stock market.

The most important of all, they want to give good information to the investors, who stay in the stock market. When their stock price is underestimated, they want to raise their stock price through doing stock buyback policy. It can give good signals to the investors that they are very optimistic to their stock in the future. Besides, stock buyback can save their stock price. Because if the outstanding stock is less than before. Then the stock price might be higher.

When a company wants to allocate their free capital, they can allocate their money by repurchasing their stock or giving their shareholders some dividends. But usually the capital gains tax is lower than dividend income tax. So, the shareholders can gain more benefit through saving the amount of tax.

Next one is because of the considerations of financial leverage. In order to adjust their financial structure, the company can use their free capital or borrow more money to repurchase their stock. Because they can use fewer equity funds to gain more profit.

And if the environment lack of investment opportunity. The company can use their free capital to give it back to their shareholders in many ways. In this case, if the money is lower than before, it can avoid those managers to invest useless money and also, it can reduce the agency cost.

Last reason is that this company wants to control more power of itself and reduce the risk of potential takeover possibility. If they can reduce the outstanding buyback,