["< sod > share repurchases also allow companies to covertly distribute their earnings to investors without inflicting them with taxation. for example, if a company were to pay us $ 100, 000 in dividends on one million shares or as 10¢ dividend per share, investors may incur tax upon this disbursement. this means that instead of receiving 10¢ of earnings per share, they receive 8. 5¢ (. 10× ( 1 & nbsp ; − & nbsp ;. 15 ) ) at a 15 % tax rate with 1. 5¢ going to the government. an investor with 10 shares will receive 85¢. as the company has to pay out this money the share price drops accordingly, from us $ 10 to us $ 9. 90, so the investor with 10 shares now has ; us $ 99 + 85¢ dividend, or us $ 99. 85. of course, the market will not necessarily respond to a dividend payment by selling off shares and reducing share price ; while the payment of the dividend technically reduces the company's book value, the ability and willingness to pay a dividend is often seen positively, and the share price may even increase. < eod > < sod > share repurchases also allow companies to distribute their earnings to investors without inflicting them with taxation. for example, if a company were to pay us $ 100, 000 in dividends on one million shares or as 10¢ dividend per share, investors may incur tax upon this disbursement. this means that instead of receiving 10¢ of earnings per share, they receive 8. 5¢ (. 10× ( 1 & nbsp ; − & nbsp ;. 15 ) ) at a 15 % tax rate with 1. 5¢ going to the government. an investor with 10 shares will receive 85¢. as the company has to pay out this money the share price drops accordingly, from us $ 10 to us $ 9. 90, so the investor with 10 shares now has ; us $ 99 + 85¢ dividend, or us $ 99. 85. of course, the market will not necessarily respond to a dividend payment by selling off shares and reducing share price ; while the payment of the dividend technically reduces the company's book value, the ability and willingness to pay a dividend is also often seen positively, and the share price may even increase. < eod >"]