[articulatepang]

> The money goes to the investors who sell.

The investors who sell are wealthier by amount $X because now they have fewer shares and more dollars.

The investors who don't sell are wealthier by the same amount $X because the shares they kept are worth more, because prices go up.

> keeping the share price initially constant. This statement is definitely incorrect, unless you're being very technicaly and pedantic about "initially". You can think about it theoretically or you can look at empirical evidence. It is well-supported empirically that share prices go up after buybacks, and in fact they do so quantitatively by exactly the amount necessary for the equation implied above to hold.

[mdemare]

No, this is incorrect. Investors like buybacks, so when the buyback is announced, share prices may rise, but certainly not by the amount of the buyback. They don't go up when the buyback gets executed, unlike dividends, which decrease the share price at the moment when they get distributed.

The equations are: nr_shares * share_price = cash_of_company + value_of_company_excluding_cash.

In a buyback, cash_of_company decreases by the buyback, and nr_shares decreases by buyback / share_price.

Consider the extreme case, a lemonade stand with a bank account with $1M. 1000 shares outstanding, share price $1000. After a buyback of $900K is announced, 900 shares are sold for $1000. $100K remains in the company's bank account, 100 shares remain outstanding, at ... $1000 per share.

[direwolf20]

The second sentence relies on the assumption of infinitely liquid shares, which isn't compatible with an ever–dwindling number of shares outstanding.