The $1 Trillion Question: New Approaches to Regulating Stock Buybacks

17 Pages Posted: 19 Nov 2018

See all articles by Lenore Palladino

Lenore Palladino

University of Massachusetts at Amherst - College of Social and Behavioral Sciences - Department of Economics

Date Written: October 17, 2018

Abstract

Stock buybacks—transactions in which public companies buy back their own equity securities on the open market—are on track to reach $1 trillion in 2018. Such repurchases manipulate the market price for issuer securities. They represent a choice by firms to prioritize shareholder payouts over other uses of corporate funds, contributing to widening economic inequality. Currently, stock buybacks are regulated by the Securities and Exchange Commission’s Rule 10b- 18, a “safe harbor” rule that does not ameliorate market manipulation. This Essay recommends a new regulatory regime, outlining several alternative approaches to ensure the integrity of capital markets and corporate productivity.

Keywords: Stock buybacks; Securities Law

Suggested Citation

Palladino, Lenore, The $1 Trillion Question: New Approaches to Regulating Stock Buybacks (October 17, 2018). Yale Journal on Regulation, Vol. 36, 2018, Available at SSRN: https://ssrn.com/abstract=3274357

Lenore Palladino (Contact Author)

University of Massachusetts at Amherst - College of Social and Behavioral Sciences - Department of Economics ( email )

Amherst, MA 01003
United States

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