Share Buyback Proves That There Is A Wise Management In That Particular

Share buyback proves that there is a wise management in that particular organization; investors will see this move as maintenance to the resources of the investors.
Company directors that choose to invest the excess cash that they have in non-profitable projects will be seen in the financial markets as not reliable; investors will know that the top management of that company is not sound.
Some school of thoughts claim that share buybacks are bad for the minority shareholders if they are not accompanied with the selling of the shares of the directors.
The reason for that is the fact that company directors own shares and share options in the company and if the company made a share buyback, the share of directors and managers in the company will increase and this will open the door for possible misuses.
Many economists recommend that share buyback has to be accompanied by the selling of the shares of the directors in order to keep a sound management system in the corporation, Siu, J & Weston, F(2002).

Finally, Share repurchases can violate the interests of the last majority of uninformed shareholders when only inside shareholders have information about the exact timing of repurchase transactions and the amount that the issuing company will purchase.
Insiders could use that knowledge to dispose of their shares at a higher price than under normal market conditions, IKENBERRY/VERMAELEN 1996.
This illegal action would cause a wealth transfer from outside shareholders to inside shareholders and if anticipated by outside shareholders should lead to a negative announcement effect.
2.6 Signaling:

Share buyback are used a signaling tool, dividends convey information about the future cash flow of the company.
Motivations are normally in line with shareholders' interests; this includes the attempt by management to convey to investors that the true value of their corporation's equity exceeds its current market value.
Such a signal might be based on management's believe that the true mean of the probability distribution of the firm's future cash flows is actually higher than perceived by the market or alternatively, that the true variance of future returns is higher than expected, holding the distribution mean constant, DANN (1981)
We have two cases depending on the prices of the financial assets of the company:

In the first case, all of the firm's risky securities appear to be undervalued. In the latter case, only equity claims appear to be undervalued, whereas claims in the form of risky debt might in fact be overvalued.
Share repurchases could actually lead to a re-distribution of debt holders' wealth to the benefit of shareholders.
It is typically assumed that insiders which are the company's management and directors know a lot more information about the company's cash flow situation than insiders.