Profits Without Prosperity: Questioning The Morality Of Share Buybacks
- IJLLR Journal
- 5 days ago
- 1 min read
Teesta Itilekha, O.P. Jindal Global University
ABSTRACT
Share buybacks, also known as share repurchases, are a highly common tactic employed by companies to increase earnings per share and thereby increase shareholder value. Although this practice of buying back one's own shares is legally permissible, prioritising profit over Corporate Social Responsibility has raised questions about its ethical implications. This study examines the benefits of share buybacks including signalling market confidence, stabilising stock prices, and maximising surplus cash flow as well as their drawbacks, including the perception of market manipulation and the hindrance of long-term investment in sustainability and employee welfare. This study finds that the practice can create an illusion of growth that ultimately undermines certain stakeholders' value. The conclusion drawn is that businesses should focus on efficiency in profit maximisation, with due consideration for long-term investment in technology, innovation, and skill. Profit maximisation is essential for business growth, but it should not come at the cost of incurring liabilities. The ultimate goal of a business is prosperity, but it is not the only one. In the real world, financial success and growth often go hand in hand with welfare, long-term goals, sustainability, and Corporate Social Responsibility. Profits without prosperity are meaningless without addressing the well-being of the socio- economic society.
Keywords: Buyback of Shares; Share Repurchase; Profit Maximisation; Market Manipulation; Corporate Social Responsibility; Corporate Governance.
