Are stock buybacks harmful to the economy?

Thanks for taking the debate.

I want to note first, that buybacks are totally legal and regulated so I shall try to make my argument opinion based, and not use the legitimacy in my advantage.

1) Buybacks are efficient. If a company lacks investment opportunities and is holding cash, buybacks return capital to shareholders who can reinvest it more productively elsewhere. In another company for example. Therefore benefiting the economy in general.

2) It Prevents executives, in some cases, from using excess cash for unprofitable expansions or acquisitions or even luxury spending. As seen in the US very often (Dennis Kozlowski $2M birthday party or Adam Neumann $60M private jet while ‘WeWork’ lost billions)

3) Management buying back shares usually sends a positive signal to the market that the stock is undervalued.

4) Returning value to the shareholders is consistent with good governance. Since they are actually the owners of the company. And also: No one is forced or incetivized to sell shares; buybacks happen in open markets under regulations.

5) Companies buy back shares after meeting investment and R&D needs (or other development spending), not instead of them. They don’t just spend cash because they don’t like it.

So, in conclusion, buybacks are profitable for the economy since they allow shareholders to allocate their cash in different stocks, thus increasing other stocks’ value and they help the company itself by not holding cash (which loses value over time) but rather investing in its own stock and increasing its value.

So, in total, the economy grows, benefiting not only the company in question but also other companies.

Waiting for the counter-argument.