Why should a company buy back “ownership” for itself?
It’s usually just to make the stock price going up without doing anything real to augment it, so the top management hits their bonus triggers and/or their stock options become more valuable.
So it’s them enriching itself and the owners pay the bill for it.
For the Shareholders it usually doesn’t create any real value like R&D Investment or giving it back through dividends would do.
And we’ve seen it in the US like with the Airlines that the companies blew all their profits for Stock Buybacks, and then immediately demanded for a bailout when business became tougher
In the end it gives the company more autonomy, and less power to shareholders who mostly look for short sighted gains. So in some cases it is a step in the right direction.
Why should a company buy back “ownership” for itself?
It’s usually just to make the stock price going up without doing anything real to augment it, so the top management hits their bonus triggers and/or their stock options become more valuable.
So it’s them enriching itself and the owners pay the bill for it.
For the Shareholders it usually doesn’t create any real value like R&D Investment or giving it back through dividends would do.
And we’ve seen it in the US like with the Airlines that the companies blew all their profits for Stock Buybacks, and then immediately demanded for a bailout when business became tougher
In the end it gives the company more autonomy, and less power to shareholders who mostly look for short sighted gains. So in some cases it is a step in the right direction.
That is not a rule though.
It doesn’t, the buyed back stocks belong to the company which belongs to the remaining shareholders