If the directors and bosses stopped caring about the share price, the shareholders would be more likely to kick them out and recruit some more co-operative people.
If you want companies to care less about share prices, you'll have to structure companies differently.
Increasing the value of the company? Awesome, go ahead. That's what the bailout is supposed to be for.
Buying back stock? No. No value is created.
There two sides to a buyback transaction, and saying it creates no value is BS. Someone is SELLING.
If the issue is just using debt to buy equity, then there is some discussion to be had, but even then, the result looks more like a need for a stress test/capital buffer rather than a ban. Alternately, just modify the tax treatment of buybacks to look exactly the same as dividends.
Or GE could invest in increasing wages, particularly for the lowest-paid workers. Return capital to the actual producers of the capital.
There is an interesting problem where if workers get a 401k or IRA, then buybacks probably help them by driving asset appreciation in a tax free investment vehicle. BUT, if you don't get that, then appreciating equities doesn't do you any good.
In general, the answer is probably a moderate amount of all proposals. Increasing wages is certainly something that companies should be doing.
Finally, some portions of buybacks are used for equity awards to employees, so it is possible that buybacks might end up as tax-privileged payments to workers, albeit not to the ones who are most dependent on wages.
(So maybe therefore the CEOs won't increase the wages unless people start resigning?)
Stocks/dividends/buybacks are a system designed to capture all profits. No surprise and nothing really wrong there, but what annoys me is that shareholders like to pretend that __unless all profit goes into dividends/buybacks, it's a waste and a sign that the company is making poor decisions__, which is not the case. It does not take into account the lives of employees beyond the cost to company. That is also a perfectly reasonable investment for a company to make and, in fact, is one that it has a duty to invest in.
Stock value is reduced because petty shareholders refuse to acknowledge that workers deserve growth from company profit just the same as they do.
A company generating demand for its own stock does not create value, it creates liquidity. I hope you understand the difference.
As for the solution, I think we're on the same page. Government debt should not be used for creating liquidity for shareholders holding a shitty asset.
There's a line of thinking which says either a) buy all your equity and go private when the innovation runs out, or b) issue bigger and bigger dividends from FCF and then eventually go out with a bang. IMO, those are strategies that should be specific to a business model. E.g. a gas pipeline may love to pay out dividends since the business model is quite steady. A big electronics manufacturer might want to buy back its shares in the hope that it can eventually go private to restructure.
my point is, the mechanic of a buyback is not inherently evil, and does provide value. I agree that the government should not be creating that liquidity. Though, in reality I don't have a specific problem with letting the government issue convertible debt if companies want a long-term counterparty. the irony is that buybacks are often seen as short-termist, but bailouts should have a long-term lens.
Dividends seem also like the correct way to distribute profits back to shareholders. Buybacks on the other hand, I agree, are extremely shortsighted. If not used to go private and restructure the company, buybacks are a tool to provide liquidity to the more well-informed shareholders at the expense of other shareholders. Any sort of public debt financing of buybacks should be completely off the table.
Convertible debt seems like a good structure. If companies want to take the chance on the debt and they fail, the company would be effectively nationalized. In any case, a condition of any such note should be to prevent dividends and buy-backs. Any reasonable investor would probably include such terms.
And yet, if people want to liquidate it does drive the price down, but, the market is about price discovery and valuation - the company may have different beliefs about its value and different preferences, hence buybacks.
Returning value to shareholders isn't nefarious.
For example a common argument to ban buybacks is that they were illegal prior to 1982. We also had no good place to park savings before 1982, where at the same time we had seen enormous inflation the stock markets had been on steady decline since the mid 1960s. People weren't just losing money due to inflation, they had fewer options about where to put it reliably.
And when it comes to regulation I don't know what the best way to do it is other than letting companies that made bad buybacks die, or bail them out by diluting shareholders in some kind of bankruptcy proceeding.