Last year's surge in US buybacks to all-time highs has sparked a public debate about the best uses of corporate cash. To some, the rise in share repurchases comes at the expense of investment. But Goldman Sachs Research's strategists struggle to find evidence to support this view or other common buyback critiques. Allison Nathan from Goldman Sachs Research talks to experts on both sides of the issue in this episode of the Top of Mind at Goldman Sachs podcast.
William Lazonick, emeritus professor of economics at the University of Massachusetts, argues the increase in companies buying back their own shares is the unfortunate outgrowth of weakening corporate governance and managements competing to boost their share prices. But Aswath Damodaran, professor at the NYU Stern School of Business, sees buybacks as simple corporate finance decisions to give back money when investors can earn better returns with the money than the company believes it can achieve. Alison Nathan examines research on the repercussions for workers and the broader economy.