The Dangers of Buybacks: Mitigating Common Pitfalls

Sarah Keohane Williamson, Ariel Fromer Babcock, and Allen He, FCLT Global say that the dangers of stock buyback programs include executive compensation gaming, employee trading, contribution to income inequality, excess leverage, and poor timing of investment decisions.

Buybacks are often associated with long-term value-destroying behaviors, including several means of personal gain and enrichment, poor timing of investment decisions, and excess leverage. As attractive as buybacks may be as a method to return cash to shareholders, they are a powerful tool that can lead to serious dangers.

The Dangers of Buybacks: Mitigating Common Pitfalls

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