Special Episode: What’s Wrong with Buybacks?
All Else Equal: Making Better Decisions
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Bibacks and Dividends Are Different
The idea that sometimes when a firm announces a stock by back, we see the price go up is perfectly consistent with the idea that the management of the firm knows more about what's going on inside the firm. Another reason why bibacks and dividends are somewhat different is the taxation of them. Right now, it is actually the case that dividends and capital gains are axed at the same rate. But bybacks have a big advantage from an investor's perspective, because they get to choose. You only pay the taxes if you choose to participate in the byback. Wy that's not the case with the dividend. Although it's also true that many investors invest in retirement accounts where they won
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