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The judgement involves a lot of non monitory considerations I don't think it would be appropriate for a direct answer.
When the company's shares are listed in the stock exchanges why should an option exercise? Once the agreement is signed the next day onwards if the shares sharp shoot at higher levels who is at a loss? Again what about the future benefits for the company if you have offered a part of your holdings?.
Moreover if dividend are offered the eligibility is for all the shareholders. If buy back offer is made you may or may not opt for it- i.e you have the choice to accept or reject the offer.
Assuming the company has a certain amount of cash they wish to return to shareholders, the two ways they can do it are through dividends and share repurchases. Share repurchases (also referred to as a share buyback or a stock buyback) are typically more flexible for the company, while dividends are more flexible for the shareholder.
The basic answer is that share repurchases are great when the share price is undervalued, and not-so-great when the share price is overvalued. To put it into a more useful context, if you would otherwise reinvest your dividends or invest new capital into the company at current stock prices, then share repurchases are useful to you because the company basically does it for you. The alternative is that the company could pay you a higher dividend, but you’d be taxed on that dividend and reinvest it into the company anyway. On the other hand, if you would not reinvest dividends or invest new capital into the company at current prices, then share repurchases are not in alignment with your current outlook, and it would be better for you to receive a higher dividend.
Something else to be considered is that when a company uses money for share repurchases when it could be paying a higher dividend instead, the company’s management is limiting your control and increasing theirs. As a shareholder in a company that makes uses of share repurchases, you have to rely on management’s ability to judge whether it’s an appropriate time to repurchase shares, whereas with your dividend, you have complete control over that choice. The flexibility of dividends for shareholders is great, because if allows you to direct your flow of income to where you think the best investment opportunities are at any given time. Share repurchases lack that flexibility.
It is more efficient to repurchase shares.
It de3pends on many factors and situations. For example:
repurchases are great when the share price is undervalued, and not-so-great when the share price is overvalued
It depends on the future plan of the company and that of its promoter(s).
However, in case, it decides to buy back the shares, it would require more amount depending upon the prevailing stock price in the market. Moreover, once the board decides the buy back the shares, the stock price shoots up expecting a higher premium from the company.
Whereas , if it decides to pay dividend, expense would be less in comparison to buy-back. But again it all depends on the company and its promoter(s). Further, there are some regulatory issues as well,like maximum % of shares a promoter can have etc.
if company want cash for future plan such as building new factory it should make distribution through issued new shares if it aim to dilute price of share
However company buy it's shares to rise price of share or to change the owner of shares
repurchase shares, supporting the value of the shares.
Not an expert in this zone; however from the above answers it sounds that it is management's strategic decision how they would like to control the company and the share prices in the market.
AGREE WITH MR VENKITARAMAN ANSWER
