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A note on the effects of debt buybacks in the MM world

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  • Mark Schaub

Abstract

This study notes that in the world of Modigliani and Miller (MM), a debt buyback program will maximize the share price as well as cash flows to the stockholders. Also, holding period returns for investors that buy into the company before the debt buyback are higher than a similar MM firm that does not repurchase its debt.

Suggested Citation

  • Mark Schaub, 2008. "A note on the effects of debt buybacks in the MM world," Applied Financial Economics Letters, Taylor & Francis Journals, vol. 4(2), pages 77-79.
    • Handle: RePEc:taf:raflxx:v:4:y:2008:i:2:p:77-79
    DOI: 10.1080/17446540701579014
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