Keep in mind that buybacks and dividends are very different for holders of stock options. Option holders benefit from buybacks but get nothing from dividends - that money is just gone (unless they are very rare "dividend protected" options). This much bigger than the difference than taxation.
Since management both holds lots of options and makes the decision to do buybacks it is unlikely that they are completely unrelated. Empirically it has been know since at least 1998 that management with lots of stock options are more likely to buyback shares[1].
Very interesting. Of course you could replicate it with dividends as well by saying "I'll be paying X$ per outstanding share as well as offering to swap any option by another with a strike price that's X$ lower". The fact that the buyback does the same thing in a mostly unnoticed way is a very nice hack.
>Since management both holds lots of options and makes the decision to do buybacks
yep, sounds like a nice reason for otherwise completely stupid action - willfully spending best asset, cash, [thus in particular worsening the company's asset structure] to buy the worst asset - the company's own stock - as the stock once bought back loses all the value to the company.
Since management both holds lots of options and makes the decision to do buybacks it is unlikely that they are completely unrelated. Empirically it has been know since at least 1998 that management with lots of stock options are more likely to buyback shares[1].
[1] http://www.nber.org/digest/nov98/w6467.html