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by aketchum
1218 days ago
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their entire function is to serve as a "tax-evading dividend". I fail to see why there is a difference besides on tax revenue for a buyback vs a dividend. Can you expand on why they are so bad? Would you be equally unhappy if an equal amount was spent as a dividend instead of buyback? |
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Stock buysbacks can be leveraged, can be financed with debt and you could use them to raid the company.
They also have different effect on stock price - you pay out dividends, and then market reacts. A human being decides if now your company is more valuable.
When you buyback stock, the effect is purely mechanical - sell orders are closed, and the more expensive sell orders now sell the price - price goes up in milliseconds, without any human decisionmaking.
If you paid 1 billion in dividends, it will not raise price as much as spending 1 billion on shate buybacks.