This is the same as dividends, except that the shareholders pay lower taxes.<p>Suppose you own 100 shares shares worth $100. If they issue $10 worth of dividends, then you receive $10 and the stock price goes down to $0.90, so your 100 shares are worth $90. If they do a share buyback, you get $10 and your remaining 90 shares are worth $90.<p>The main difference is that in the first case you pay dividend tax on $10, in the second case you only pay capital gains tax on 10x($1 - cost basis), plus the cap gains rate is lower than the dividend rate.