Thanks for the pointer! It seems... symmetrical(?) that if corporations can sell stock, they should be able to buy it back. It's not a whole lot different from a dividend in practice, it's just cash flowing from the corporation to the owners of the corporation. The commentary on that article about not investing back into the company isn't particularly convincing, to me anyway, just because there are lots of times that its better for anyone but the company to have the cash, especially if the company can't think of anything better to do with it than buy back their own stock. And it's not like the money disappears in a puff of smoke, presumably the shareholders reinvest the proceeds.
I'm sure my analysis is naive and missing something, but on first glance, this doesn't strike as a problem anywhere near as bad as insider trading.
Nope, you're absolutely right. The main difference between stock buybacks and dividends are the tax implications – and what they signal to the market.
Dividends tend to be "sticky" since changing them all the time gives investors little certainty over what they should expect to receive (and if there's anything investors like is certainty)
Buybacks signal management (a) has no better source for capital and (b) probably thinks the stock is currently undervalued (i.e. it's a good time to buy back cheap shares).
Companies very often do not have projects to invest with a return higher than their cost of capital, and any reasonable CFO who finds themselves on that position should pay back its equity holders who risked their money by investing in this company with a given expectation on returns
I'm sure my analysis is naive and missing something, but on first glance, this doesn't strike as a problem anywhere near as bad as insider trading.