Why do companies buy back their own shares?
In: Economics
Stock buy backs reduce the number of shares in existence thereby increasing the value of the remaining shares.
Doing a stock buyback is good for the investors because they either get cash for their shares, or their shares increase in value.
The reason it’s controversial is that companies have had a tendency lately to use government grants (like pandemic funds) to do stock buybacks instead of using it for their employees benefit.
In effect putting your tax dollars directly into the pockets of shareholders instead of supporting the workforce.
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