What to make of share buybacks?

There is a favourable interpretation of share buybacks: if a company lacks profitable investment projects, it is better to return money to shareholders, who will reinvest it in other companies more efficiently, rather than forcing themselves to make unprofitable investments or retaining unnecessary cash reserves. But this favourable interpretation does not hold if certain corporate behaviours are present: Share buybacks are financed by debt and do not correspond to the use of cash flows; The company forgoes efficient investments or R&D spending to finance share buybacks (which may happen under pressure from shareholders, or because the required return on equity is abnormally high); The company abnormally skews income distribution against employees to finance share buybacks. These deviating mechanisms, compared to the favourable version of share buybacks, can be seen in the United States as regards debt financing and cash flow financing, resulting from the skewing of income distribution. However, share buybacks are not associated with low levels of investment or research.