Eller Finance Faculty Featured in The Washington Post Op-ed on Stock Buybacks
July 22, 2020
Eller College of Management Associate Professor of Finance Alice Bonaime and Thomas C. Moses Professor of Finance Kathleen Kahle were referenced in a July 19 opinion column in The Washington Post on the current state of the stock market and economy.
The piece specifically analyzes the different aspects of stock buybacks, what companies should do with the profits they earn, whether firms should distribute sums to underlying shareholders and whether they should make efforts to support job and employment growth.
“If companies decide to pay more to shareholders, stock repurchases are the most attractive way to do it,” argues the author, in reference to Bonaime. “The reason: A dividend cut usually results in a drop in a firm’s stock price—something companies seek to avoid at all costs. By contrast, stock repurchases don’t have that drawback.”
Citing Kahle and co-author René M. Stulz’ working paper recently published in the National Bureau of Economic Research, the column explains supporting statistics: “there are two main channels for funneling profits to shareholders: dividends and stock repurchases. From 2000 to 2017, dividends and stock buybacks totaled about $10 trillion.”
Alice Bonaime joined the Eller College of Management in 2015. Her research interests include empirical corporate finance, payout policy, insider trading and mergers and acquisitions. Kathleen Kahle joined the Eller College of Management as associate professor in 2003 and was appointed the Thomas C. Moses Professor in Finance in 2014. Her research interests are around corporate finance, capital structure, securities issues, repurchases and insider trading.