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It's obvious that buy-backs are basically a hack for struggling companies to sacrifice long-time gains for short-term posturing. So what would a fair regulation

It's obvious that buy-backs are basically a hack for struggling companies to sacrifice long-time gains for short-term posturing. So what would a fair regulation around stock buy backs look like? We could make it illegal, but that seems like it would favor people who want to do corporate takeovers. Also, I've seen legitimate uses of stock buybacks, such as buying it back to give it as a grant to new employees. We could limit the amount bough or spent, or require that some percentage of stock's bought back be re-allocated to employees as grants or options. I'm not an economic person though, just spit-balling.

AnimalMuppet 7y ago
> It's obvious that buy-backs are basically a hack for struggling companies to sacrifice long-time gains for short-term posturing. No, I don't think that's obvious. Buy-backs are used that way, sometimes, but they're also used by companies that are doing well to return some money to the shareholders. Why would they do that, when they could just issue dividends? I can see at least two reasons. First, dividends require one transaction per stock owner, whereas buying stock has much less overhead. Second, dividends create an expectation that you're going to continue to issue them, which is an expectation you may not wish to create. Given that issue with your starting position, I don't think your conclusions are valid.