October 24, 2014

In the News: Criticism of Buybacks

There has been a flurry of articles this year criticizing the zany pace of buybacks including:

– Financial Times’ “Buybacks: Money well spent?
– Financial Times’ “The short-sighted US buyback boom
– Financial Times’ “Capital Group raps activists for pushing share buybacks
– WSJ’s “BlackRock’s Fink Sounds the Alert
– Financial Times’ “Shareholder activism: Battle for the boardroom
– Institutional Investors’ “Share Buybacks Slow as Scrutiny Rises
– Economist’s “The Repurchase Revolution
– DealBook’s “The Truth Hidden by IBM’s Buybacks

More on “Corp Fin Comment Letters: Insiders Selling Ahead of Their Public Availability?”

Last month, I blogged about a study that found an abnormal level of selling by insiders in the days before Corp Fin comment letters that contained revenue recognition comments were made public. After my blog, Gretchen Morgenson wrote this NY Times column touting the study.

Personally, I continue to doubt the credibility of the study – and here is some of the community feedback that I have received:

– Must be nice to be an academic. One of the dumbest studies I have ever heard of. I can only imagine it’s just happenstance.

– From the poorly written article, it did not seem like much of a bombshell, but the reporter lost all credibility in my eyes when he said repeatedly that “companies” are required to issue and publish comment letters. Is there any profession that has fallen more than business reporting in intelligence, sophistication and plain old effort (would not have been hard to get this right)? Maybe if I read the actual study, I would be more alarmed.

– Wow! That’s INSANE! At first I thought this had to be anomalous but after glancing at the report, maybe not! My second thought is that maybe management puts too much emphasis on the correlation to long term stock price depression and SEC Comments. Honestly not sure what to make of this (except for the fact that the author got the comment letter process wrong!).

Cybersecurity: Verizon Data Breach Investigations Report

With cybersecurity the hot topic – I have held two webcasts on the topic over the past month – it is worth taking a look at this 60-page Verizon Data Breach Investigations Report that was released last month. The Verizon report contains a host of useful information as it relies on over 63,000 incidents from 50 organizations for it’s analysis. Also check out our checklists related to incident response planning, disclosure practices and risk management – as well as a chart of state laws related to security breaches…

Meanwhile, Kevin LaCroix blogs that a closely watched cybersecurity derivative suit against against Wyndham Worldwide Corporation’s board has been dismissed

– Broc Romanek