“We have so much capital, we cannot use it,” Jamie Dimon of JPMorgan quipped to investors. The bank’s cash pile has doubled over the past year, to more than $500 billion. It’s a similar story at other banks, and now that they’ve been cleared by regulators to resume share buybacks, “we’re going to be aggressively…
Tag: stock buybacks
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…
Examining Corporate Priorities: The Impact of Stock Buybacks on Workers, Communities and Investors
In testimony before Congress, Harvard Law School professor Jesse Fried outlines the potential for abuse in stock buybacks: Executives can use buybacks to transfer value from public investors to themselves, reducing investor returns and, perhaps, distorting corporate decision-making in a way that reduces the size of the overall economic pie. This abuse is facilitated by…
Nell Minow on Buybacks (NPR Marketplace)
VEA Vice Chair Nell Minow appeared on NPR’s Marketplace program to discuss buybacks (start around the 12 minute mark to hear that topic).
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…
SEC Admits It’s Not Monitoring Stock Buybacks to Prevent Market Manipulation
The Securities and Exchange Commission has admitted that it has no ability to enforce the main rule intended to prevent market manipulation when companies buy back their own stock, and has no intention to do so. SEC Chair Mary Jo White made the acknowledgement in a response to Sen. Tammy Baldwin, D-Wisc., who queried the…
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