Archive · 30 Jun 2025
Study: Share Buybacks May Benefit Other Firms More
Imagine a company buying back its own stock.
A new study found that this doesn't always help the company's stock price.
Instead, it often helps other companies!
This is because when people sell their shares back to the company, they usually use the money to buy shares of different companies.
The study also found that buybacks could help younger companies grow by giving them more money to invest.
So, while it seems like buybacks are for the company doing them, they actually help other companies more.
Study suggests share buybacks boost other companies' stock prices more than the repurchasing company's.
Analysis of U.S. stocks from 1986-2023 revealed a positive correlation between total buybacks and the performance of non-repurchasing firms.
Apple's stock performance lagged behind the S&P 500 despite spending heavily on buybacks in the first quarter.
Investors selling shares in buyback programs tend to reinvest in other companies.
Buybacks may reallocate capital to younger, growth-oriented firms, potentially aiding growth.
- Who
- Byungwook Kim conducted the study.
- What
- Study indicates share buybacks might be inefficient at boosting a company's own stock price.
- When
- Study analyzed data from 1986 to 2023.
- Where
- U.S. stock market
- Why
- To examine the impact of share repurchases on companies and market dynamics.
Traditional View of Buybacks
Study's Perspective
Capital Allocation
Traditional View of Buybacks
Companies should invest in future growth opportunities instead of buybacks.
Study's Perspective
Buybacks contribute to growth by reallocating capital to younger, growing firms.
- Study Title
- Do Share Repurchases Increase the Value of Non-Repurchasing Firms?
- Lead Researcher
- Byungwook Kim
- Period of Analysis
- 1986-2023
- Apple's Q1 Buyback
- $25 billion
- Apple's Q1 Performance
- loss of 9.3%
- S&P 500 Q1 Performance
- gain of 9.8%
- Invesco BuyBack Achievers ETF Inception
- December 2006