Originally Posted by
BlackPeter
Not sure I would put it that way. Sure - there is no right or wrong to the method of using share buybacks, but there are times when this method of capital return is an advantage to shareholders, and there are other times when it is a disadvantage to shareholders.
If the company pays dividends (it can afford to pay), than the individual shareholder can decide what to do with the money - which is a quite fair and neutral way to return earnings.
If the company however buys back their shares, than there are two scenarios:
(1) Share price is sustainably rising - which means the company was in the eyes of the market more worth than market cap at the time of buyback. In this case the share buyback made a lot of sense for share holders, I would call this a "right" or "good" decision of the board.
(2) Share price is sustainably dropping - which means that the company was in the eyes of the market less worth than market cap at the time of the buyback. In this case the share buy back destroyed shareholder assets and I would call it a wrong or bad decision of the board.
Obviously - there are as well these cases in between, where it does not really matter whether the company paid dividends or choose to buy back shares. Depending on the relevant legal system there might be though some tax benefits for share buybacks, but this is a different story.