In a way, the company has an earnings yield of EPS/stock price (or inverse PE). If the company cannot invest the money in its operations that makes a larger return that the earnings yield then the stock is actually a better investment. The huge issue is that when markets crash is when technically a company should be buying back tons of its stock but rarely do companies ever do this and instead elect to hoard cash when buybacks are best & spend money on buybacks when it’s the worst ROI (when the market is hot & earnings yield is minimal).
So if a company just keeps offering to buy stock at a high enough price to match existing sell orders it'll push the price of a stock up.
Whether that's sustainable in the long run is a different story, but there's no ironclad mathematical relationship.
1. It signals to investors that the company is confident and low risk. (Research and development is considered high risk.)
2. It makes the company more purely itself, it doesn't have shares backed by cash that drag back its price growth. If people expect future growth this means that growth per share will be higher, so they would start buying now to get some of that future higher growth. (Of course in addition to magnifying growth it also magnifies decline.)
An interesting thing is that this article says
> Stock buybacks can have a mildly positive effect on the economy overall.
Which seems to contradict what that previous article said. This article also says that stock buybacks will cause other companies to do more research and development.