Managerial Finance Article Example | Topics and Well Written Essays - 1000 words

Managerial Finance - Article Examplethe last orthodontic braces of trimesters the crude oil prices have been consistently going up which is sign that the industry is in recovery and there are good profits to be made for players such as Vaalco Energy. The latest press release from Vaalco Energy announced that the company intends to implement a voice salvation programme value $10 million. This paper analyzes the strategic move of initiating a share buyback programme at Vaalco Energy.A share buyback programme refers too a corporate initiative to purchase its own shares from shareholders that are selling the common stock in the open market. These programs have a money cap which indicates the effect of the programme. In the Vaalco Energy case the cap of the programme is $10 million, which means that once the company is able to purchase that amount equity the share buyback programme ends. Once the company buys back these stocks the investment asset can be consider treasury stocks. Tre asury stocks are created when a company does a share buyback and purchases its shares in the open market (Investopedia, 2009). The company intention on purchasing its own stocks should not have any impact on the industry as a whole. This it is not made for any strategic purpose associated with the external politics of the company, nor does it impact the competitors in any way. A share buyback programme is an internal financial management decision that the executive staff of a company selects with the authorization of the board of directors to take advantage of neighborly market conditions.Share Buyback programmers should be initiated only if an internal valuation of the companys values determines that the corporations stock is trading on a lower floor expected value. When an investors sees that corporation initiates a buyback program the general belief is that the stock price of the company should be going up briefly due to the fact that the firm has determine the company is tradi ng below expected value. The initiation of such a