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The Buyback Divide: How stock buybacks distort markets and deepen wealth inequality
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Publication date
2026-06-30
Document type
Research report
Pages
40
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English Paper
Adobe PDF, 2.22 MB
Description
This report examines how stock buybacks and the broader model of shareholder primacy contribute to the racial wealth gap in the United States. While racial wealth inequality is often discussed in relation to wages, housing, or inheritance, the report shows that unequal ownership of corporate equity has become an increasingly important driver of wealth inequality. Because white households hold the overwhelming majority of corporate stock and mutual fund wealth, the gains generated by rising share prices and shareholder payouts flow disproportionately to already-wealthy white households.
The report finds that stock buybacks are not a neutral corporate finance tool. By directing corporate profits toward shareholders rather than workers, innovation, or long-term investment, buybacks reinforce existing racial and economic inequalities. The analysis shows that corporate equity now accounts for a much larger share of the racial asset gap than in previous decades, and that trillions of dollars in shareholder gains from buybacks have flowed overwhelmingly to white households, while Black and Hispanic households have received only a small fraction of the benefits. At the same time, workers of color face a double burden: they are less likely to benefit from shareholder gains and more likely to be harmed by wage suppression, layoffs, and cost-cutting tied to shareholder value strategies.
The report concludes that reducing the racial wealth gap requires stronger limits on stock buybacks and reforms to corporate governance, executive compensation, and shareholder payouts. Key policy messages include restricting or banning open-market share repurchases, requiring stronger disclosure and oversight, preventing executives from personally profiting from buyback activity, and encouraging companies to invest more in workers, wages, and long-term productive capacity. These reforms would help shift corporate resources away from short-term wealth extraction and toward a more equitable economy.
Language
English