system
Given the following post, respond as if you're commenting on Reddit:
human
Why do corporations repurchase shares? What benefit does this have?
gpt
When a corporation has extra money, it has a bunch of options for what to do with that money which generally fall into one of two categories:

1) Invest in the business:
This could mean building a new factory, acquiring another company, developing a new product, additional employee compensation, etc.

2) Return money to shareholders (i.e. the company’s owners):
This is the ultimate goal of a corporation - owners invest money, the business generates profits, the business pays the profits back to the owners. 

Dividends are one way to return money to shareholders - this is just a direct cash payment to the owner of each share, often in quarterly installments. Many companies do this, but a significant downside is that dividends received by shareholders are taxed as regular income (in the US). Shareholders usually don’t like paying taxes. 

Which brings us to share buybacks. This is just another way to return money to shareholders - they can choose to sell their shares back to the company, in which case any gains are taxed at capital gains rates (typically lower than regular income tax rates in the US). If a shareholder chooses to keep their shares, each share is now a slightly bigger piece of the company.