31/01/2018
Government to investigate ‘share buy-backs’
Whether or not companies are purchasing their own shares to artificially inflate their executives’ pay will be investigated by new research commissioned by the government as part of on-going corporate governance reforms first announced last year.
Consultants PwC, who have been commissioned to carry out the research, will be supported by Professor Alex Edmans of London Business School and their findings will be published later this year.
Share buy-backs, where a company purchases its own shares, reduces the number of its shares on the market and can often raise the share price and increase a company’s earnings per share – a calculation often used to help determine the size of an executive’s pay packet.
While the government accepts there are also a number of valid reasons why companies should re-purchase its shares, the potential for share buy-backs to pave the way for executive pay rises even when a company is performing poorly will be the focus of the research.
In addition to shedding new light on how and when buy-back schemes are used and helping to raise public trust in big business and corporate standards, the research will help to determine whether further action is needed to prevent share buy-back from being abused.
The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!
The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!
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