Dear Alon,
I found your article very interesting, but I am a bit confused with your findings. My understanding is that "sell-off" is not directly comparable to buybacks or dividends, because it does not affect the cash balance of the company.

I have learnt that in the theoretical Modigliani-Miller framework investors are indifferent between dividends and buybacks. The effect of buybacks is also independent from the tender price. Suppose that the offer price is over fair value. Then every shareholder should tender his stocks. If stocks are repurchased proportionally, there is no transfer of value, because the premium paid is distributed among shareholders proportionally to their holdings. Therefore in theory the management cannot create value for shareholders via share buybacks. Naturally, this is just a theory and you probably cannot expect that all investors behave rationally.

I believe that the major difference between dividends and buybacks comes from the tax treatment - differences in capital gain tax and dividend tax rates.

What do you think? I would really appreciate your comments on it.

Best regards,
Jakub