> How are buybacks defrauding anyone?

Mr Doctorow's point is that the company is taking money from its operations, which it should be spending on expanding those operations and increasing its value, and spending that money on artificially inflating its share price, by effectively wash trading the shares, creating artificial demand, and artificially reducing supply.

If you bought shares in the company as a long-term position in order to receive dividends then you do not benefit from buybacks, and arguably lose out (because the money used on the buyback could have been distributed as a dividend). It only benefits short-term speculator shareholders. And, of course, the executives who are incentivised on share price, for whom a buyback is a much, much, easier way to get those incentives than actually doing their jobs and using the money to grow the company.

Thanks for the explanation.

How is any of that fraud? Fraud doesn't just mean you have to disagree with something someone does, but you have to have been lied to.

> And, of course, the executives who are incentivised on share price, for whom a buyback is a much, much, easier way to get those incentives than actually doing their jobs and using the money to grow the company.

Companies can and should adjust the incentives so that the effect of dividends and buybacks are the same for the executive. (They already adjust for share splits for example.)

> If you bought shares in the company as a long-term position in order to receive dividends then you do not benefit from buybacks, and arguably lose out (because the money used on the buyback could have been distributed as a dividend).

Before you buy any shares, you should check what management says about their plans. At least, if you have specific expectations.

Even if buybacks were outlawed, companies aren't guaranteed to pay dividends. It's perfectly legal to never make a profit, or to give all your excess money to charity. You just have to tell your shareholders.

> Mr Doctorow's point is that the company is taking money from its operations, which it should be spending on expanding those operations and increasing its value, and spending that money on artificially inflating its share price, by effectively wash trading the shares, creating artificial demand, and artificially reducing supply.

Yeah, that's a stupid objection.

The substantial first half of it would equally well apply to dividends. (And the whole point of giving money to companies as an investor is that eventually you are getting more back.)

The second half is just not how any of this works. Does he even know what a wash trade is? And what's 'artificial' about this?