Criticism of Buyback
1. Misalignment of Incentives: According to a few critics, CEO pay linked to stock overall performance may encourage buybacks as a way of producing short-term earnings rather than concentrating on the long-term, sustainable value advent for stakeholders and shareholders.
2. Lack of Investment in Employees: Opponents contend that buybacks take funds away from paying salaries, benefits, and employee training, which worsens wealth disparity and slows worker wage increases.
3. Market Manipulation: The repurchase of shares by firms to artificially boost stock prices or profits per share (EPS) metrics, which benefits executives who receive stock-based remuneration, is perceived by some opponents as a type of market manipulation.
4. Market Volatility: Critics worry that buybacks can make the market more volatile since, in times of market excess, firms might repurchase shares, but during downturns, they might stop or scale back their buyback programs, which would affect stock prices.
5. Lack of Accountability: Opponents contend that buybacks may be opaque and accountable in that businesses may fail to explain their repurchase intents or justifications, which leaves stakeholders and investors in the dark.
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