Worm Capital, LLC (Worm Capital) is an investment management firm with a focus on equity-oriented strategies. We analyze industries that are experiencing a wave of disruptive forces.
How Stock Buybacks Hurt Long-Term Investors: Q&A With Economist William Lazonick
Facing record-setting levels of buyback activity in 2018, we thought we'd revisit our 2017 interview with award-winning economist William Lazonick.
Lazonick is a professor of economics at the University of Massachusetts Lowell who studies innovation and competition in the global economy. He is also the author of Profits Without Prosperity, an exposé into how trillions of dollars of stock buybacks are being used by CEOs to enrich themselves at the expense of American workers, and long-term shareholders.
Regarding buybacks, Lazonick told us:
"The company has to retain enough to reinvest in the future. But with the rise of the ideology that companies should maximize shareholder value, it was all about “disgorge.” It was the notion that the money in the corporation shouldn’t be there, it should be reallocated in the market. So there were a bunch of people who had an ideology about value extraction and no theory at all about value creation, who were coming in and saying here’s how we should run the economy."
Access our full interview here .