Impact of Share Repurchases on EPS and ROE

XYZ Corporation is evaluating its policy on dividends and share repurchases. The management is pondering over the impacts these strategies might have on the firm’s financial ratios. Following a substantial share repurchase, they want to understand how this transaction will affect the earnings per share (EPS) and return on equity (ROE).

Given that a share repurchase reduces the number of shares outstanding, consider the implications of this decision. How does a share repurchase generally affect EPS and ROE?