Yeah, I don't really understand the negative sentiment here. If a company's buying back stock, then someone's selling those shares. That investor now has extra cash on hand to invest somewhere else. It's not like that capital just gets thrown into an empty pit.
Mature companies returning money is a pretty natural state of affairs. Unless you believe that all growth and investment over the next 25 years is going to be done by exactly the same set of companies from the last 25 years.
That's a recipe for stodgy sprawling monopolistic conglomerates. Competition and innovation is only possible when new entrants challenge entrenched players. And turnover in firms is only possible when capital is transferred from the large, pre-estabilished firms to small, growing ones.
That transfer of capital to innovative challengers necessarily involves large, mature companies returning money to shareholders either in the form of dividends or buybacks.
Prohibiting buybacks might increase dividends. It’s more likely to boost M&A. What it unlikely is for internal R&D, capital investment or hiring to benefit.
Mature companies returning money is a pretty natural state of affairs. Unless you believe that all growth and investment over the next 25 years is going to be done by exactly the same set of companies from the last 25 years.
That's a recipe for stodgy sprawling monopolistic conglomerates. Competition and innovation is only possible when new entrants challenge entrenched players. And turnover in firms is only possible when capital is transferred from the large, pre-estabilished firms to small, growing ones.
That transfer of capital to innovative challengers necessarily involves large, mature companies returning money to shareholders either in the form of dividends or buybacks.