A share buyback, also known as a stock repurchase, occurs when a company purchases its own shares from the marketplace. This action reduces the number of outstanding shares, which can increase the value of remaining shares and improve financial ratios like earnings per share (EPS). Companies often use buybacks to return excess cash to shareholders when they believe their stock is undervalued. Share buybacks can signal to investors that a company is confident in its future prospects. However, they can also be controversial, as critics argue that funds used for buybacks could be better spent on growth initiatives or employee compensation. Overall, buybacks are a common strategy in corporate finance.