Profits without prosperity.

• Autores: William Lazonick
• Localización: Harvard business review, ISSN 0017-8012, Vol. 92, Nº 9, 2014, págs. 46-55
• Idioma: inglés
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• Dialnet Métricas: 4 Citas
• Resumen

  • Though corporate profits are high, and the stock market is booming, most Americans are not sharing in the economic recovery. While the top 0.1% of income recipients reap almost all the income gains, good jobs keep disappearing, and new ones tend to be insecure and underpaid. One of the major causes: Instead of investing their profits in growth opportunities, corporations are using them for stock repurchases. Take the 449 firms in the S&P 500 that were publicly listed from 2003 through 2012. During that period, they used 54% of their earnings--a total of $2.4 trillion--to buy back their own stock. Dividends absorbed an extra 37% of their earnings. That left little to fund productive capabilities or better incomes for workers. Why are such massive resources dedicated to stock buybacks? Because stock-based instruments make up the majority of executives� pay, and buybacks drive up short-term stock prices. Buybacks contribute to runaway executive compensation and economic inequality in a major way. Because they extract value rather than create it, their overuse undermines the economy�s health. To restore true prosperity to the country, government and business leaders must take steps to rein them in. INSET: Idea in Brief. [ABSTRACT FROM AUTHOR]