Date: Tuesday, 27 October 2020
Time: 8:00AM – 9:00AM (AEST)
Location: Via Zoom (link to zoom will be sent when registration confirmed)
In the decade 2010-2019, companies in the S&P 500 Index spent $5.3 trillion on stock buybacks, equal to 54% of their profits, while paying out $3.8 trillion in dividends, another 39% of profits. The 50 largest corporate re-purchasers accounted for 53% of all S&P 500 Index buybacks over the decade, spending 62% of profits on buybacks and another 39% on dividends. Proponents of buybacks argue that these companies are “returning free cash flow” to shareholders, who then reallocate these financial resources to their best alternative uses, thus enhancing economic efficiency. In this lecture. Professor Lazonick will draw upon business history and innovation theory to confront this conventional perspective on stock buybacks and resource allocation. He will argue that the US experience demonstrates how, since the mid-1980s, stock buybacks have served to concentrate income among the richest households, erode middle-class employment opportunities, and undermine industrial innovation and economic development.
Professor William Lazonick
The Academic-Industry Research Network
William Lazonick (professor of economics emeritus at University of Massachusetts) is co-founder and president of the Academic-Industry Research Network. He is an Open Society Fellow and a Canadian Institute for Advanced Research Fellow. He has professorial affiliations with SOAS University of London and Institut Mines-Télécom in Paris. Previously, Lazonick was assistant and associate professor of economics at Harvard University, professor of economics at Barnard College of Columbia University, and distinguished research professor at INSEAD in France. Lazonick earned his B.Com. at the University of Toronto, M.Sc. in Economics at London School of Economics, and Ph.D. in Economics at Harvard University. He holds honorary doctorates from Uppsala University and the University of Ljubljana.
His research focuses on the social conditions of innovation and economic development in advanced and emerging economies. His book Sustainable Prosperity in the New Economy? Business Organization and High-Tech Employment in the United States (Upjohn Institute 2009) won the 2010 Schumpeter Prize. His article, “Innovative Business Models and Varieties of Capitalism,” won the Henrietta Larson Award from Harvard Business School for best article in Business History Review in 2010 (he had previously won this prize in 1983).
In 2014, he received the HBR McKinsey Award for outstanding article in Harvard Business Review for “Profits Without Prosperity: Stock Buybacks Manipulate the Market and Leave Most Americans Worse Off”. In 2020 Oxford University Press published his book, co-authored with Jang-Sup Shin, Predatory Value Extraction: How the Looting of the Business Corporation Became the U.S, Norm and How Sustainable Prosperity Can Be Restored. In recent years, the Institute for New Economic Thinking, Gatsby Foundation, Open Society Foundations, and Canadian Institute for Advanced Research, European Commission, Ford Foundation have funded his recent research on innovation, financialization, and development.
CFA Societies Australia has determined that this program qualifies for 1 Professional Learning credit hour under the guidelines of the CFA Institute Continuing Education Program. If you are a CFA Institute member, login to your profile to record your CE credit for your participation in this presentation.