The Case against Stock Buybacks

On the floor of the New York Stock Exchange, July 2018. (File photo: Brendan McDermid/Reuters)
Buybacks are prone to outrageous abuse, and incentivize executives to enrich themselves at shareholders’ expense. They should be outlawed.

NRPLUS MEMBER ARTICLE B oeing bought back stock at $400 a share in 2018, and now, two years later, finds itself in cash-flow difficulties with its share price hovering around $120. This is obviously bad for shareholders, but, even given the fact that the current pandemic is a genuinely exceptional event, such predicaments have a way of recurring every business cycle. While stock buybacks benefit top management with stock options, they tend to be unhelpful to ordinary shareholders and are not that great for the economy either. I am generally opposed to government intervention in the marketplace, but there are exceptions, and this should

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