NYU, Research Associate
“...in the wake of the financial crisis, many companies have shied away from investing in the future growth of their companies. Too many companies have cut capital expenditure and even increased debt to boost dividends and increase share buybacks. (Laurence Fink, BlackRock CEO)”
Industries with more quasi-indexer institutional ownership and less competition invest less.
Share buybacks began increasing soon after 1982, when SEC rule 10b-18 allowed companies to repurchase shares on the open market without regulatory limits.
Firms that rely heavily on stock-option-based compensation are significantly more likely to repurchase their stock than firms which rely less heavily on stock options for executive compensation.
Investment-Less Growth: An Empirical Investigation