Comment by aurareturn
9 hours ago
Share buyback is the same as giving dividends - except the share holder doesn’t have to pay taxes until they sell. To the company, they spend the same amount on share buyback vs giving dividends. I don’t see how this argument holds up.
Further more, while some might argue that corporate R&D is better due to being closer to the problem but it is private research and not shared with the world like university research is.
It's not exactly the same: if the company does buybacks and then loses value or goes bankrupt, shareholders never get the benefit of those buybacks.
Shareholder prefer buybacks for tax reasons.
He didn't say it was exactly same, only that in principle it's the same - company returning money to shareholders.
Such an action has no effect on company valuation.
depends how sophisticated the investor in the story is. it thay are perfect homo economicus they would have been selling some of those inflated shares to do what they would have done with the dividends