Filed under: Insiders, Law, Competitive strategyStandard & Poor's has studied the impact of stock buybacks and reached some pretty disconcerting findings. As stock buybacks have soared in popularity and become a favorite demand of activist investors, S&P found that they might not be so great after all.
As the company put it: "Conventional wisdom holds that (1) stock prices go up as a result of buybacks, (2) more buybacks are better than fewer buybacks, and (3) announced share buybacks actually reduce the number of outstanding shares significantly.
"Based on a study of buybacks conducted by S&P's Equity Research Services of the 18 months ended June 30, 2007, we believe that all three points were unsupported by the data during that period."
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