When a company repurchases its own shares, two competing readings of the act circulate among analysts. On the favorable reading, a buyback is a credible signal: managers, who know more about the firm's prospects than outside investors do, will only retire shares with cash when they judge those shares undervalued, so the repurchase conveys private confidence in future earnings. On the skeptical reading, buybacks are a default deployment of cash that managers cannot or will not invest in expanding the firm's productive capacity; by shrinking the share count, a buyback mechanically lifts earnings-per-share even when total earnings are flat, flattering performance metrics to which executive pay is often tied. The two readings are not always distinguishable from the outside, but they make different predictions. If the signaling story holds, firms that buy back stock should subsequently report stronger operating earnings than comparable firms that do not. If the substitution story holds, heavy repurchasers should over time show eroding capacity—aging plant, thinner research pipelines—relative to peers that plowed the same cash into investment. A complication is that a single firm may do both at once: a genuinely confident management might also be quietly starving a maturing business line. The readings, in short, are rival emphases more than mutually exclusive accounts, and the evidence that would adjudicate between them is the firm's later trajectory, not the announcement itself.