A primary criticism of stock buybacks is that they draw corporate resources away from other growth-inducing activities, like investing in research and development, spending on capital investments, or improving worker compensation.

“The terms “stock buyback” and “share repurchase” refer to the practice in which companies repurchase their own stocks from shareholders on the open market. This creates a scarcity of shares and boosts their value. Corporate executives benefit from this because share repurchases drive up the value of their stock-based compensation and give them an opportunity to cash out their personal stock holdings at a profit (Palladino 2018; Jackson 2018); furthermore, shareholders can benefit, but only if they sell their shares at the artificially inflated prices. This means that fewer corporate resources are available for growth-inducing activities, such as investing in research and development, spending on capital investments and new technologies, or creating new jobs and improving worker compensation.”