The better question might be, why would a profitable company borrow money for the purpose of buying back shares? If they want to reward shareholders, they can

The better question might be, why would a profitable company borrow money for the purpose of buying back shares? If they want to reward shareholders, they can issue a dividend. If they think the company will grow, the can invest in growth. The "argument" made is that companies think their stock is undervalued by the market and want to capture that price growth. Why would so many companies think their stocks are "undervalued" in 2018 after a 10 year bull market? Before 1982, we viewed buybacks as market manipulation and it was illegal [1]. In reality, companies do this in order to increase their stock price and earnings per share, the two things for which executives are typically compensated. If you take the same earnings and divide over fewer shares, you have magically increased your EPS without improving the actual business. [1] https://www.forbes.com/sites/aalsin/2017/02/28/shareholders-should-be-required-to-vote-on-stock-buybacks/#50bc2d046b1e https://www.forbes.com/sites/aalsin/2017/02/28/shareholders-...