[AznHisoka]

I am not a financial expert but how are buybacks reflected in a company’s balance sheet?

My theory is that buybacks give companies a false sense of complacency. If they do $1 billion worth of buybacks, it doesn’t feel they are really “giving out” $1 billion back to investors. Rather, $1 billion in cash just got converted to a long term asset(their shares). Thus this is how airlines get into a cash crunch. They are lulled to believe they can go crazy with buybacks with no consequences.

If instead they did a special dividend for $1 billion, they would immediately feel the consequences. It is money taken straight out of their bank. Thus they would of course consider more carefully how much to give as a dividend.

Just my theory and why I am against buybacks and for dividends only.

[beagle3]

Stocks bought back disappear (making each remaining share reflect a larger percentage of the company). It is in general the reverse of a public offering in which money comes in and new shares come into existence (making each previously existing share represent a smaller part of the company).

This is not technically exact, but probably a good mental model.