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senate Bill S. 2605

Should Stock Buybacks be Prohibited?

Argument in favor

Stock buybacks help companies artificially boost their stock prices, manipulating the market to reward corporate executives and shareholders instead of workers. Empowering employees to elect members of their corporation’s board would align companies’ and employees’ interests.

IllWill's Opinion
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06/01/2018
Yes! Stock buybacks artificially raise the price of a corporation’s stock and lead to even bigger pay raises for the CEO and the executive board without any effort on their part. This practice only obscures the real value of the company. Also, at a time when we have ever increasing income and wealth inequality employees need to have some say over who runs the corporations that employ them! This is a great bill!
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Mike's Opinion
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06/01/2018
CEOs use this to inflate value and to enrich themselves and it doesn’t do anything to help the employees!
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Jacob's Opinion
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06/01/2018
Reagan administration's decision to make stock buybacks legal coincided with longterm wage stagnation. Since then, something like 90 percent of corporate profit goes to this rather than reinvestment in employees. It's simple stock manipulation to line CEOs and heavy investors profits in the short term. Theres no good reason for it to be legal besides some vague sense of "government=bad" that has been drilled into conservatives heads. Government IS bad-- it's just that it's when they don't protect the economy from reckless aristocrats.
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Argument opposed

Stock buybacks are a healthy part of financial markets that benefit investors, including the more than 50% of Americans who directly or indirectly own stock. That money can then be reinvested or used to start businesses or purchase goods and services — all of which boost the economy.

Devan's Opinion
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06/01/2018
Government’s role is not to run businesses. Companies can determine what’s best via the free market, not “masterminds” in their ivory towers trying to legislate utopia.
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JTK's Opinion
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06/01/2018
This idea is so misguided it is hard to believe that anyone would actually propose it. Stock issuance and stock repurchase are a fundamental principle of corporate (public company) finance. Corporations issue stock to raise capital and expand. The value of those shares is roughly related to the value of the corporation’s assets plus a premium based on the expected potential for a profit. Issuing more shares decreases the underlying value per share. Buying back shares increases the value per share. There is NOTHING ARTIFICIAL about the increases or decreases, as the bill summary states. In many cases, the employees are also shareholders through 401Ks or other stock purchase plans. So the value of the employees shares are also affected directly based on these actions. The idea of prohibiting stock repurchases (only one side of a transaction) is absurd. The bill also proposes that public companies be required to have one third of the board consist of employees. Although this might have some attraction to a company as part of good management, requiring it by law seems Communist inspired. I guess that’s no surprise considering the political leaning of the sponsoring Senator. These days, communists call themselves Democratic Socialists. Overall, the bill is a bad idea and another attack on American values that we have fought so hard to protect.
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Karan's Opinion
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06/01/2018
No it should not be prohibited at all. It’s a private company. Who are you to tell a private company what to do with their own money? Think of it this way. When they buy back their stock, it helps small investors also. The company’s stock goes up significantly, allowing the investor to make a profit. Then that investor can invest in creating jobs or raising wages.
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    Yes! Stock buybacks artificially raise the price of a corporation’s stock and lead to even bigger pay raises for the CEO and the executive board without any effort on their part. This practice only obscures the real value of the company. Also, at a time when we have ever increasing income and wealth inequality employees need to have some say over who runs the corporations that employ them! This is a great bill!
    Like (93)
    Follow
    Share
    Government’s role is not to run businesses. Companies can determine what’s best via the free market, not “masterminds” in their ivory towers trying to legislate utopia.
    Like (49)
    Follow
    Share
    This idea is so misguided it is hard to believe that anyone would actually propose it. Stock issuance and stock repurchase are a fundamental principle of corporate (public company) finance. Corporations issue stock to raise capital and expand. The value of those shares is roughly related to the value of the corporation’s assets plus a premium based on the expected potential for a profit. Issuing more shares decreases the underlying value per share. Buying back shares increases the value per share. There is NOTHING ARTIFICIAL about the increases or decreases, as the bill summary states. In many cases, the employees are also shareholders through 401Ks or other stock purchase plans. So the value of the employees shares are also affected directly based on these actions. The idea of prohibiting stock repurchases (only one side of a transaction) is absurd. The bill also proposes that public companies be required to have one third of the board consist of employees. Although this might have some attraction to a company as part of good management, requiring it by law seems Communist inspired. I guess that’s no surprise considering the political leaning of the sponsoring Senator. These days, communists call themselves Democratic Socialists. Overall, the bill is a bad idea and another attack on American values that we have fought so hard to protect.
    Like (28)
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    No it should not be prohibited at all. It’s a private company. Who are you to tell a private company what to do with their own money? Think of it this way. When they buy back their stock, it helps small investors also. The company’s stock goes up significantly, allowing the investor to make a profit. Then that investor can invest in creating jobs or raising wages.
    Like (17)
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    CEOs use this to inflate value and to enrich themselves and it doesn’t do anything to help the employees!
    Like (16)
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    Reagan administration's decision to make stock buybacks legal coincided with longterm wage stagnation. Since then, something like 90 percent of corporate profit goes to this rather than reinvestment in employees. It's simple stock manipulation to line CEOs and heavy investors profits in the short term. Theres no good reason for it to be legal besides some vague sense of "government=bad" that has been drilled into conservatives heads. Government IS bad-- it's just that it's when they don't protect the economy from reckless aristocrats.
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    Why is this up for debate? The purpose of government is not to control the private sector. That's why it's called the private sector, and not the public sector. Keep the government out of this. Regulation is good up to a point, but this is WAY overstepping the boundary between sensible and ridiculous.
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    These idiot politicians don’t know how to run a business, many of them have never even had a job in the private sector. They know nothing about basic economics, they can’t even balance a budget. Yet they think they can dictate how executives run their companies. The government ruins every industry it tries to manage. Get the government out of the business of running business.
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    This needs to be passed. Your great tax cut only helped the corporations by allowing them to purchase buybacks and not reinvesting in their workers. I think everyone in the United States should go on strike and then maybe you will realize that the country would not run without the workers working
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    These are Private entities, you cannot tell them they cannot do this! Ive seen it is common with most companies anyways. If you do not like the business practices, well you can "fuck off."
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    This is far too simplistic of a solution. There may be reasons when a stock buy-back makes sense because it benefits the company, the bought-out stockholders, and the remaining stockholders. Maybe there should be a regulation that a company can only buy back so much percentage or value of its stock during a certain period. For example, maybe a complete buy-back should take 10-20 years. If the point of the Trump corporate tax cut was to create jobs, maybe it should have been structured as a job-creation corporate tax credit. Our politicians need to rely on staff (their own or CBO) who understand economics and the incentives that various tax policies create.
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    If the company is publicly traded then yes. The employees should have a say who is on the board. If your going to get rid of unions there has to be some protection for workers.
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    I fully agree that stock buybacks help companies artificially boost their stock prices, manipulating the market to reward corporate executives and shareholders instead of workers. Empowering employees to elect members of their corporation’s board would align companies’ and employees’ interests. 6*1*18
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    More federal government overreach. They do not need to control everything. Shrink the swamp.
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    Government needs to stay out of business as much as possible
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    Absolutely! I just wish this bill had more teeth and actually put an end to the corrupt practice of stock buy backs. All they do in enrich corporate executives & to a much lesser degree, shareholders while doing next to nothing for the workers. No wonder they are at an all time high and rising under 45.
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    Absolutely. Stocks buy backs have absolutely no business purpose. The company gains no benefit whatsoever. From the standpoint of running a business it makes no difference if the price of their stock is $5 or $500. The only time a company gains resources to expand their business is when the company issues stock or bonds. A company gets nothing on the trading of stocks or bonds on any stock exchange, that is simply a bargain between the buyer and the seller. The company got their money when the issued the stock, after that they don’t own the stock and don’t get anything when the stock is resold. Stated simply, it is merely a way to artificially boost stock prices, usually, just in time to pad executive’s pay (mainly) and large stockholders. Market manipulation is not a function of a free market and this creates a golden opportunity for insider trading.
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    The free markets create growth. I oppose any controls on private industry relative to buybacks.
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    Of course it’s a Democrat that has introduced this bill. This bill will hurt the free market! Government needs to stay out of businesses!
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    This is only step one in the monumental effort to reduce the corrupting power of corporations in this country. I’d opt for 50% of shareholders should be elected by the employees, but a third is a good start. Further, corporate buy back of shares needs to stop. Next, let’s go after Citizens United.
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