On Sep 16, 2007, at 10:36 AM, Yoshie Furuhashi wrote:
> But if shareholders found investments more profitable than
> debt-financed buybacks, wouldn't they demand the former rather than
> the latter?
Too much risk and too much time. They want the money now.
Money managers are compensated based on their performance. Buybacks boost their performance quickly and reliably, which boosts their haul. They add a new layer to the agency problem that came up in the Morgenson article on Jensen that I just posted.
Doug