The short mathematical answer is yes, when a company buy back shares, the number of outstanding shares decreases, and the earnings per share increases, hence possibly causing the share price of a company to go up. All else held equal, if a current minority shareholder holds on to her share, the value of her share will be worth more.
However, through our research, we have in recent months noticed an intriguing phenomenon where companies with a Western-led mindset, in their quest to increase their earnings per share, have resorted to borrowing easy money to buy back their companies’ shares, some in drastic quantum.
Some issues might be that some world class companies touted as role-models seemed to have overdone it, including to the point where 1) they borrowed so much money to purchase their shares, that they literally reached negative Net Tangible Assets status. Caused in part due to the equity of the business decreasing (share buyback) while the liabilities increase (debt increase), and a unique blend of high goodwill due to past acquisitions of intangible “brands” and “relationships” etc. This means current shareholders who hold on to their shares will effectively be liable for more debt and hold less equity, to pay the redeeming shareholders who sold their shares.
2) because of their share buyback announcements, the valuations of some of these companies have reached all time highs while the companies are buying back their shares. But it doesn’t seem to bother the management whether they are buying their shares back at historical high levels or in a disciplined manner, as though the only thing that matters is to increase the earnings per share no matter what. Given that some of them receive their bonuses based on their companies’ share price performance and earnings per share growth, it’s quite straightforward to deduce some incentivised bias on the management part.