Stock repurchase?

Question:

if a firm has excess cash it wants to distribute to shareholders, what are the factors it should take into account in deciding between a repurchase, a one time special dividend, and an increase in it's regular dividend?

Answer:
When trying to value the effect of a stock repurchase make sure to incorporate the dilution from the exercise of options by insiders.

Repurchase shares - This will increase our earnings per share, and hopefully raise our stock price. Keeping the repurchased shares in "treasury" will hold our value, and may be used in the future for acquisitions (without going into a great deal of debt). Special Dividend - Income investors will like this but is income what our shareholders buy our shares for, or is it for growth?
Increase regular dividend - Can this increased level be maintained? Do we want to look good by establishing a record of consecutive years of increased dividends, so should we increase slowly?

Stock repurchase?

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