Re: Root Cause
"If the board's bonuses are related to the share price then all the board cares about is share price, to the extent that it's better for them to use profit to buy the company's own shares and drive the price up instead of using it to fund R&D to make the company better"
There are times when it makes sense for a company to buy back shares. It's not necessarily better to shovel money into R&D if, for example, you are a car company and the CEO wants to build humanoid robots. Spending money to bring new models to market or develop technology so the company can build better cars faster and cheaper, sure.
There's a certain management cost for every share of stock issued. If it looks like the company would have fewer or the same number of shareholders after a buyback, that could mean savings on administration. The price per share should go up if the company's market cap remains the same and that might reduce the number of small shareholders.
It's not a universal that stock buybacks are bad.