Still, the crisis has exposed the potential failings of a strategy embraced by many big companies: aligning their priorities with the interests of shareholders, many of whom are narrowly focused on the performance of a company’s shares. Shareholders, wanting stock prices to go higher, pushed management to use up cash on buybacks and dividends. And senior executives, paid largely in stock and on the basis of how the stock performed, were happy to oblige. The result was that companies often didn’t have much spare cash, leaving them even more exposed to economic downturns.
“They should have built up some buffers against such sudden shocks and risk,” said Willi Semmler, an economics professor at the New School for Social Research in New York.
In the three years through 2019, spurred on by Mr. Trump’s tax cuts, companies in the S&P 500 stock index spent $2 trillion on buybacks, 30 percent more than what they spent over the previous three years, according to an analysis of data from CapitalIQ. Including dividend payments, S&P 500 companies spent $3.5 trillion in the most recent three years — an amount that was equal to their net income for the period.
Regulatory requirements prescribe how much cash banks and insurers need to hold, but there are few such rules for other companies.

via Some Companies Seeking Bailouts Had Piles of Cash, Then Spent It – The New York Times