The influence of share buybacks on ill-health and health inequity: an exploratory analysis using a socio-ecological determinants of health lens

Abstract

Introduction Share buybacks, when a corporation buys back its own shares, are recognised as having potentially harmful impacts on society. This includes by contributing to economic inequalities, and by impeding investments with the potential to protect and promote the welfare of various stakeholders. Share buybacks, however, have received minimal analytical attention in the public health literature. This paper aimed to explore the potential influence of share buybacks on population health and health inequity using a socio-ecological determinants of health lens. Methods We conducted a descriptive analysis of share buybacks made by corporations listed on United States (US) stock exchanges between 1982 and 2021, using quantitative data sourced from Compustat. We examined annual trends in share buyback expenditure, including comparisons to dividend, net income, capital expenditure, and research and development expenditure data. We then purposively sampled a set of corporations to provide illustrative examples of how share buybacks potentially influence key socio-ecological determinants of health. The examples were: i) three COVID-19 vaccine manufacturers; ii) five of the world’s largest fossil fuel corporations; and iii) US car manufacturer General Motors. For these, we conducted an analysis of data from Compustat, company reports and grey literature materials, focusing on key sources of profits and their allocation to share buybacks and particular investments. Results US-listed corporations spent an estimated US$9.2 trillion in real terms on share buybacks between 2012 and 2021 (nearly 12 times more than from 1982 to 1991). The contribution of share buybacks to total shareholder ‘returns’ increased from 11% in 1982 to 55% in 2021, with expenditure on shareholder returns increasing considerably relative to capital, research and development expenditure over this period. The three examples illustrated how some corporations have prioritised the short-term financial interests of their shareholders, including via implementing large share buyback programs, over investments with considerable potential to protect and promote the public’s health. Conclusion The potentially substantial impacts of share buybacks on health warrant increased research and policy attention. Arguably, more must be done to regulate share buybacks as part of efforts to address the corporate drivers of ill-health and inequity.

What is the purpose of ultra-processed food? An exploratory analysis of the financialisation of ultra-processed food corporations and implications for public health

“…The norm underpinning this mode of corporate governance is often labelled 'shareholder primacy', referring to the belief or view that the sole purpose of the business corporation should be to maximise returns for its shareholders or private owners because this is the most rational and e cient way of achieving the broader social good [36]. While 'shareholder primacy' has emerged to dominate the theory and practice of corporate governance in the world economy, sector-speci c analysis can help to determine the extent to which the norm has been operationalised by a particular sector, as well as expose some of its sector-speci c implications [36,37].…”

“…Various neoliberal and neoclassical assumptions are often used to legitimise and justify this form of corporate governance, often by contending that it is the most rational and efficient way of achieving the broader social good [36]. While 'shareholder primacy' has emerged to dominate the theory and practice of corporate governance in the world economy, sector-specific analysis can help to determine the extent to which the norm has been operationalised by a particular sector, as well as expose some of its sector-specific implications [36,37].…”

Taking on the Corporate Determinants of Ill-health and Health Inequity: A Scoping Review of Actions to Address Excessive Corporate Power to Protect and Promote the Public’s Health

“…[28][29][30][34][35][36][37] These dynamics take play within broader systems that, in recent decades, have become increasingly neoliberalised and financialised (albeit to varying degrees), characterised by a suite of policies, norms and governance arrangements that have accommodated, rather than confronted, corporate power. [38][39][40][41][42][43] A few notable exceptions notwithstanding, 7,27,39,[44][45][46][47][48] discussions and research on how to curb excessive corporate power remain relatively underdeveloped in the public health literature. With this in mind, this paper aimed to identify a diverse range of actions with the potential to address excessive corporate power.…”