As predicted, President Trump’s tax cut legislation is leading less to investment in innovation and higher wages, and more to stock buybacks to create short-term gains. In the New York Times, Matt Phillips reports: President Trump promised that his tax cut would encourage companies to invest in factories, workers and wages, setting off a spending…
Tag: buybacks
Marco Rubio: Tax Bill ‘Probably Went Too Far’ On Corporate Handouts | HuffPost
[Senator Marco] Rubio expressed his reservations [about the Tax Legislation] in an interview with southwest Florida’s News-Press Thursday, noting he thinks Republicans probably gave corporations too much of a handout.“<P><P>If I were king for a day, this tax bill would have looked different,” he said. “I thought we probably went too far on [helping] corporations.”The…
Bad Buybacks Can Destroy Shareholder Value
David Trainer echoes our concerns about buybacks and makes a good point — with specific examples — about the misaligned incentives that lead to what he calls “bad buybacks.” In theory, share buybacks are an efficient mechanism for companies to return cash to shareholders when they believe the stock is undervalued and have more cash…
How America’s Inequality Machine Is Firing the Dow Into Orbit
VEA Vice Chair Nell Minow is quoted in a Bloomberg story about the disconnect between the stock market and the economy. This isn’t a case of “what’s good for General Motors is good for the U.S.,” said Minow, who’s dedicated her career to pushing corporations toward long-term investments in people and businesses. “In my list…
Response to Michael R. Levin on Buybacks
Thanks to Michael R. Levin of Valuewalk for his thoughtful, respectful, if unpersuasive attempt to rebut my Huffington Post column titled: Can’t Boards Find a Better Use for Capital Than Buybacks? I genuinely appreciate the opportunity to engage on this topic. Levin does a good job of setting out the conventional portfolio manager’s view on buybacks. We differ because my approach…
Can’t Boards Find a Better Use for Capital Than Buybacks?
Just like the rest of us, corporate executives and board members have some tough choices to make about how to spend the company’s money. Or, I should say, our money. A public company sells stock to outside investors, meaning those of us with pensions and 401(k) plans and mutual funds. Its primary obligation by law…
A Simple Test to Dispel the Illusion Behind Stock Buybacks – The New York Times
Gretchen Morgenson writes about the skewed incentives for stock buybacks: Some critics say that top managers who preside over big stock repurchases are failing at one of their most basic tasks: allocating capital so their businesses grow.Even worse, buybacks can be a way for executives to make a company’s earnings per share look better because…
Share Buybacks Driven By Executive Compensation
No other topic splits opinions in the financial community like share buybacks. The pro buyback camp believes that using buybacks to return excess cash, is a prudent way of improving shareholder returns while those against buybacks claim that they are a waste of money and only benefit managers by boosting executive compensation. Each argument has…
Investor Jeremy Grantham warns stock buybacks slowing growth | Reuters
Low interest rates and a play-it-safe mentality among executives have fueled a stock buyback boom that is slowing economic growth, storied contrarian investor Jeremy Grantham said on Wednesday. Grantham, well-known for his dour views about the U.S. Federal Reserve’s economic growth efforts and his concerns about the environment, said corporate leaders find it too easy…
