Question 3a.According to annual stock data,

Question 3a.According to annual stock data, Facebook has paid $0 dividend from 31 Dec2012 to 31 Dec 2018. Facebook has never declared to pay any cash dividendfor the purpose of retain earning to finance the operation and expansion(Facebook Inc 2018, p.28). b.During the period from 31 Dec 2012 to 31 Dec 2018, Facebook repurchased1,132 shares in 2015, and there was no other share repurchased in year 2012,2013 and 2016 (Appendix 7). Until November 2016, it was announced thatshare repurchase program of up to $6.0 billion stocks commencing in January2017, with no expiration date (Facebook Inc 2016, p.24). Following theannouncement, Facebook buyback in total 5,840 shares during 2017, and25,708 shares in 2018 (Appendix 7). During 2015, Facebook exercised their rights to repurchase the unvestedacquisition share, as the recipience of the unvested shares are no longer employedby Facebook (Facebook Inc 2015, p.28). It was not a publicly announced plan orprogram, and the share was purchased directly from specific shareholders, thereforeit’s very likely that Facebook used ‘Targeted Repurchase’ as the form of sharebuyback in 2015. Furthermore, in 2017 and 2018, the shares were repurchasedthrough open market purchases or privately negotiated transactions (Facebook Inc2018, p.79). The price decreased to almost 40% of the peak price due to scandal in2018, and also there was a significant quantity of shares to be repurchased, buybackthrough the open market could be the most flexible and cost-effective way as thetiming of the share repurchase minimizes price impact while taking advantage of theshare price under-valuation (Rodriguez,2018).c.Facebook’s annual report stated that it never declared and did not expect topay any cash dividend, the intention is to retain its earnings for the purposeof accelerating corporate growth and expansion. Facebook prefers payouts inform of share repurchasing over cash dividends for a few reasons.Shareholders are effectively taxed twice in the year when receiving cashdividends, which leads them to pay an unnecessarily higher tax (Fedorov2017). Moreover, payout dividends reduce the earnings to finance expansion,likely slowing down the growth of share prices. Facebook implemented alarge number of share repurchasing in 2018, due to the extremely low stockprice, which Facebook believed was undervalued. Stock buyback indicates theremaining shares became more valuable to investors and higher EPS, whichalso lead to appreciations in share price. Therefore, buybacks are beneficialfor investors by enhancing shareholder value, and creating tax beneficialopportunities. The payout policy of Facebook is quite consistent with firms in the sameindustry, such as Google, Snapchat and Twitter that payout as forms of sharerepurchase, and no dividend payout due to IPO (Appendix 8). These major socialmedia players are all mature firms that mostly focus on developmentand expansion