4 ms·

Buybacks are just dividends but more flexible for the company. It boosts stock price because it tells investors that the share is more than a speculative vehicl

• unethical_ban 7y ago
  Using almost all of your available cash flow to do stock buybacks is, by my understanding, very much against the long term health of the company, in order to inflate stock figures in a way that disproportionately helps the people making that decision. See the airline industry.
• Guest42 7y ago
  It isn't necessarily nefarious but can be. Recent events have shown quite a bit of nefarious activity surrounding this practice which is why there is a call for increased regulation.
  • unlinked_dll 7y ago
    Any business decision can be nefarious in some context when it's a bad one. At the same time as recent events may call certain buybacks into question, historical events tell a different story. For example a common argument to ban buybacks is that they were illegal prior to 1982. We also had no good place to park savings before 1982, where at the same time we had seen enormous inflation the stock markets had been on steady decline since the mid 1960s. People weren't just losing money due to inflation, they had fewer options about where to put it reliably. And when it comes to regulation I don't know what the best way to do it is other than letting companies that made bad buybacks die, or bail them out by diluting shareholders in some kind of bankruptcy proceeding.