This study examines the factors influencing decision to buyback shares in Australia. Analysis of a sample of non-financial firms included in the All Ordinaries Index for the period 2004 to 2010 show that size has significant positive influence on the decision to buyback shares. There is limited support for the view that firms buyback shares in order to reach their target optimal capital structure. The present study finds no evidence of undervaluation influencing buyback decisions of Australian firms.