In an ideal world, this is a suboptimal way to pay investors for many reasons (e.g. part of the money spent on the buyback will be taken by market speculators f

In an ideal world, this is a suboptimal way to pay investors for many reasons (e.g. part of the money spent on the buyback will be taken by market speculators for one) and it's better to pay direct dividends. But in the real world the taxes on dividends are higher than the taxes on the capgains so a buyback transfers more value to the investors than a dividend payment for the same amount.