When share repurchases increase debt and reduce spending on stocks and R&D it directly affects a firm ’s long - term ability to survive and grow in a disruptive and uncertain business environment , according to research from law school researchers . Over five years , researchers studied 1,839 private public companies and found that the more money a firm spends on buybacks , the less likely it is to grow over the long - term . It gave examples of IBM , General Electric , Sears , The Gap , JCPenney and McDonald 's as companies that have spent heavily on share buybacks as their share prices declined .
When share repurchases increase debt and reduce spending on innovation and R&D it directly affects a firm’s long-term ability to survive and grow in a disruptive and uncertain business environment, according to research from business school Insead. Over five years, Insead studied 1,839 US public companies and found that the more money a firm spends on buybacks, the less likely it is to grow over the long-term. It gave examples of IBM, General Electric, Sears, The Gap, JCPenney and Macy's as companies that have spent heavily on share buybacks as their share prices declined.