150 Results for “William Lazonick”

“Executives have an interest in getting the stock price up and price gouging customers is one way they can do this,” said William Lazonick, professor emeritus of economics at University of Massachusetts and co-founder of the Academic-Industry Research Network. While many drug companies argue that they use their vast profits to fund ongoing pharmaceutical innovation, Lazonick said, “we’ve shown that most of these companies don’t do that.” Instead, the soaring prices fuel soaring stock prices and executive pay, which is often based largely on that price.” — INET Grantee William Lazonick

“As William Lazonick and other analysts have pointed out, stock buybacks artificially inflate executive pay and drain capital that could be put to productive purpose. .[xxv] — Sarah Anderson, Counter Punch [xxv] William Lazonick, “Profits Without Prosperity,” Harvard Business Review, September 2014.”

“Critics led by William Lazonick, economics professor emeritus at the University of Massachusetts Lowell, say buybacks starve companies of cash for innovation and worker pay, and favor executives aiming to jack up the stock prices because their compensation is increasingly stock-based. The buyback trend has become controversial since a 2014 article by Prof. Lazonick in the Harvard Business Review, “Profits Without Prosperity.” The S&P 500 companies that had been publicly listed from 2003 through 2012, he found, had spent amounts equal to 54% of their earnings for buybacks and 37% for dividends, leaving “very little for investments in productive capabilities or higher incomes for employees.” — Randall Smith

Innovation drives economic growth and welfare, and the industrial corporation drives innovation, says William Lazonick. But just how do corporations innovate?

William Lazonick, president of the Academic-Industry Research Network and a professor emeritus of economics at the University of Massachusetts, who has devoted much of his research to the topic of buybacks, has written that the rule change “in effect gave corporations license to use open-market repurchases to manipulate the market.” … In an interview, Lazonick told Retail Dive, “These distributions to shareholders, particularly buybacks on top of dividends, are at the expense of keeping people employed, rewarding them for the work they’ve done, and investing in new products and processes.”

INET grantee William Lazonick’s research on drug pricing is featured in a New York Times op-ed

“In taking over industrial companies, financial managers focus on the short run, because their salary and bonuses are based on current year’s performance. The “performance” in question is stock market performance. Stock prices have largely become independent from sales volume and profits, now that they are enhanced by corporations typically paying out some 92 percent of their revenue in dividends and stock buybacks.[6]” — Michael Hudson, Naked Capitalism [6]William Lazonick, “Profits Without Prosperity:Stock Buybacks Manipulate the Market and Leave Most Americans Worse Off,”Harvard Business Review, September 2014. And more recently, Lazonick and Jang-Sup Shin, Predatory Value Extraction: How the Looting of the Business Corporation Became the U.S. Norm and How Sustainable Prosperity Can Be Restored(Oxford: 2020).

In an Al Jazeera documentary “In Search of the Great American Job”, Institute scholar William Lazonick offers some arch insights into the relationship between financialization — particularly the “shareholder value” ideology in corporations, which drives the transfer of profits to shareholders through stock buybacks — and job creation and inequality.

Stock buybacks are giveaways for greedy investors at the expense of everyone else.

INET grantee William Lazonick is profiled in The New Yorker

Sen. Tammy Baldwin features arguments in questions to SEC nominees, pharmaceutical industry witness

One of Wall Street’s favorite tools could be deepening the growing chasm between America’s rich and poor, according to INET grantee William Lazonick.

Vox cites William Lazonick’s INET paper on shareholder value

INET grantee William Lazonick explains why Sen. Tammy Baldwin is proposing to ban stock buybacks.

William Lazonick’s INET research is featured in his New York Times op-ed

INET grantee William Lazonick explains how the Trump tax cut is resulting in buybacks on Wall Street and bonuses for CEOs

“And what if there is a stock buyback during the period the share price is inflated? Does that harm shareholders because the company is spending money to repurchase its stock, or does it actually further benefit them by potentially raising earnings per share (EPS)?” … Citation: William Lazonick, The Financialization of the U.S. Corporation: What Has Been Lost and How It Can Be Regained, 36 Seattle U. L. Rev. 857, 859 (2013) (noting that trillions of dollars are spent on share buybacks and that “corporate executives who make these decisions are themselves prime beneficiaries of this focus on rising stock prices as a the measure of corporate performance”)

How rationalization, marketization, and globalization characterize the U.S. economy during the past 50 years, and how the behavior of companies and fate of American workers have changed during this process.

“What is the motivation for tax avoidance? To maximize profits and juice the stock price, of course. A research team led by William Lazonick at the University of Massachusetts reports in Harvard Business Review that from 2009 to 2019, S&P 500 companies spent over 90% of net income on buybacks and dividends, with the highest levels achieved after the 2017 tax cuts, in 2018 and 2019. Taking on corporate debt to finance share repurchases has become commonplace. Never mind that share buybacks deplete corporate treasuries of cash to weather setbacks and to fund productive investment in labor and R&D.”

Vice President warns that corporate stock buybacks restrict America’s long-term prosperity, citing the research of Institute grantee William Lazonick who has long argued the same

In their op-ed in the Washington Post, INET grantee William Lazonick and Rick Wartzman show how companies are spending their tax savings on investors, not workers.

INET experts discuss how financialization has driven up costs of healthcare—and how we can stop it.

How the U.S. New Economy Business Model Has Devalued Science and Engineering PhDs

The New York Times is having a “Room For Debate” discussion on its Opinion Page about how corporations should handle profits based on the Harvard Business Review article “Profits Without Prosperity” by William Lazonick of the University of Massachusetts Lowell, who is a grantee of the Institute for New Economic Thinking. The discussion features contributions by Bruce Greenwald, Peter Thiel, and Lazonick, among others. Lazonick argues that the capital being used for stock buybacks would be better spent on investment. Lazonick’s “Room For Debate” piece is below. To read the full discussion on The New York Times, click here.

The Theory of the Firm, Financial Flows, and Economic Performance

This note comments on Eric Weinstein’s, “How and Why Government, Universities, and Industries Create Domestic Labor Shortages of Scientists and High-Tech Workers,” posted recently on INET’s website.

The Huffington Post features INET research on stock buybacks

Price gouging in the US pharmaceutical drug industry goes back more than three decades.

How once-promising Black upward mobility reversed course, and what can be done about it

The American Prospect highlights William Lazonick’s INET paper on US Pharma’s Financialized Business Model.

The Washington Post cites William Lazonick’s INET paper on shareholder value

“If companies continue to prioritize maximizing shareholder wealth at the expense of other key stakeholders, and at the expense of investing in innovation, then the Green New Deal could reinforce long-standing income and wealth inequities and the decline in innovation in the U.S. economy (for an important example, Bill Lazonick and Matt Hopkins document how maximizing shareholder value minimized the strategic national stockpile for ventilators and personal protective equipment).” —Lenore M Palladino

Pharmaceutical drugs are often a matter of life or death. It should be a prime objective of government policy to rid the industry of financialization.

“Nobody but those top corporate executives was really paying attention to share buybacks until the middle of the last decade, when University of Massachusetts economist William Lazonick wrote an article for the Harvard Business Review documenting the surprising and depressing fact that the companies that had belonged to the Fortune 500 during the previous decade had spent so much on share buybacks and dividends that the total was either equal to or actually exceeded their profits.”

Business school students are taught to extract resources instead of creating value.

Evidence sharply contradicts PhRMA’s contention that its member companies need unregulated drug prices to generate profits that they then reinvest in drug innovation.

Investment in productive capabilities provides the foundation for economic growth.

A nation must accumulate a high-tech knowledge base to prosper.

Industry lobbyists vehemently oppose Medicare drug price negotiations. However, physician-scientist Fred Ledley and economist William Lazonick debunk their arguments.

An Institute for New Economic Thinking Working Paper by William Lazonick and Matt Hopkins reveals that much reporting on executive pay relies on systems of measurement that underreport real compensation

Renewed interest by policymakers in the challenges of long-term slow economic growth highlights the importance of the Institute’s research

A comment on the Securities and Exchange Commission’s proposed rule “Share Repurchase Disclosure Modernization”

To strengthen the American semiconductor industry, Congress should condition additional funds on suspending stock buybacks

Background paper for a presentation to the Seattle University School of Law Berle IV Symposiun, “The Future of Financial/Securities Markets,” London June 14-15, 2012.

“Build back” means restoring the government and business investments in the productive capabilities of the U.S. labor force that created a growing middle class in the three decades after World War II

Lazonick discusses how we evolved from a society in which corporate interests were largely aligned with those of broader public purpose into a state where crony capitalism, accounting fraud, and corporate predation are predominant characteristics.

Five years after the end of the Great Recession, corporate profits are high and the stock market is booming. Yet most Americans are not sharing in the apparent prosperity.

Increased financialization is driving healthcare costs and must be addressed in our nation’s public policy.

Conventional wisdom has it that the primary function of the stock market is to raise cash for companies for the purpose of investing in productive capabilities. The conventional wisdom is wrong.

There is widespread and growing concern about the availability of good jobs in the U.S. economy. Inequality has been growing for thirty years and is now at levels not seen since the 1920s. Stable and remunerative employment has become harder for U.S. workers to find.

To fulfill MLK’s vision of jobs and freedom for Black Americans, Washington must rein in corporate greed

On June 2, 1965, under a mandate established by Title VII of the Civil Rights Act of 1964, the U.S. Congress created the Equal Employment Opportunity Commission (EEOC) to enforce federal anti-discrimination laws related to employment. The expectation was that African Americans would be prime beneficiaries of the EEOC.

Business Insider quotes and cites William Lazonick’s INET-funded research on Boeing’s stock buybacks. Cross-posted in MSN, Yahoo Finance, Business News, AOL, News Break, Star News, and Web Today.

The development of COVID-19 vaccines within a year of the emergence of SARS-CoV-2 was an unprecedented triumph of scientific research that saved millions of lives. In contrast, the lack of global coordination to manage intellectual property, technology transfer, production, financing, and distribution of vaccines led to excess deaths and losses in economic output.

US regulators can step in to ensure drug pricing both supports patient access and drug development

Report to the Institute for New Economic Thinking on the statistical measurement and policy implications of the compensation of the highest- paid U.S. corporate executives

Justice requires that the media, policy makers, and the public understand why corporations engage in misconduct and fraud

In this introduction to our project, “Fifty Years After: Black Employment in the United States Under the Equal Employment Opportunity Commission,” we outline the socioeconomic forces behind the promising rise and disastrous fall of an African American blue-collar middle class.

We want an economy that generates stable and equitable growth—or what I call “sustainable prosperity.” We want productivity growth that makes it possible for the population to have higher living standards over time. We want an equitable sharing of the gains from productivity growth among those whose work efforts and financial resources contribute to that growth. And we want sufficient job stability to enable workers to remain in productive employment for some four decades at work while providing them with enough savings to provide them with adequate incomes over some two decades of retirement.

To get beyond the neoclassical fallacy, economists have to stop relying on constrained-optimization methodology

China’s successful technological development path stands in contrast to the corporate financialization model in the United States

By integrating the history of industrial development in Britain and the United States with the ideas of leading economic thinkers, this essay demonstrates the absurdity of perfect competition as the ideal of economic efficiency.

In this comment, we explain our objections to the SEC’s current formulation of the Pay Ratio Disclosure Rule on each of three grounds: the erroneous estimation of CEO pay; the unclear specification of the “median” worker; and the risk of normalizing a pay ratio that is far too high. Then we present the latest data on the remuneration of the 500 highest-paid CEOs in the United States, demonstrating the way in which the SEC’s measure of CEO pay that enters into the CEO-to-median-worker pay ratio tends to systematically underestimate actual executive pay.

The success of projects for pandemic preparedness and response depends on the strength of government-business collaborations.

The ongoing explosion of the incomes of the richest households and the erosion of middle-class employment opportunities for most of the rest have become integrally related in the now-normal operation of the U.S. economy.

Like the Great Depression and the stagflation of the ’70s, the anemic growth of the U.S. economy can’t be understood or remedied without changes in economists’ thinking

The business corporation is the central economic institution in a modern economy. A company’s senior executives, with the advice and support of the board of directors, are responsible for the allocation of corporate resources to investments in productive capabilities. Senior executives also advise the board on the extent to which, given the need to invest in productive capabilities, the company can afford to make cash distributions to shareholders. Motivating corporate resource-allocation decisions are the modes of remuneration that incentivize and reward the top executives of these companies. A sound analysis of the operation and performance of a modern economy requires an understanding of not only how much these executives are paid but also the ways in which the prevailing system of executive pay influences their decisions to allocate corporate resources.

As the “Technoking” of Tesla strategizes to maintain his control over the company’s decision-making, anyone concerned with the role that Tesla will play in the evolving EV transition should be asking how CEO Musk might use, or abuse, his powerful position.

Umass Lowell Economics professor William Lazonick, outlines the history of how government policy and economic conditions contributed to the rise and fall of a Black blue-collar middle class. Part 2 takes a closer look at the role of finance and stock buybacks and what can be done to reverse the trend towards growing inequality.

Business firms are not alone in making investments in the productive capabilities required to generate innovative goods and services. Household units and government agencies also make investments in productive capabilities upon which business firms rely for their own investment activities.

On the dereliction of key US-based business corporations to take the lead in making the investments in organizational learning required to generate cutting-edge communication-infrastructure products.

Medicare negotiators need to have a deep understanding - both theoretical and empirical - of the learning processes involved in developing a drug to negotiate a price that is fair.

William Lazonick emphasizes that keeping workers productively employed is key to economic recovery from Covid-19 as well as a healthy economic future

Many Americans have expressed outrage over Pfizer’s plan, through its merger with Allergan, to move its tax home from the United States to Ireland. Now, in a New York Times op-ed, Carl Icahn, the billionaire corporate raider turned hedge fund activist, has joined the chorus. He labels the Pfizer-Allergan deal a “travesty,” blaming the U.S.’s “uncompetitive international tax system.”

Industrial journalist Ken Jacobson and economist William Lazonick (both of the Academic-Industry Research Network), call for an end to stock market manipulation through buybacks.

The Institute for New Economic Thinking (INET) and the Open Society Foundations (OSF) announced that OSF has made a gift of $23.5 million to INET. The grant marks the completion of the organizations’ 12-year collaboration.

The Academic-Industry Research Network—theAIRnet—is a 501(c)(3) not-for-profit research organization devoted to the proposition that a sound understanding of the role of business in the economy requires collaboration between academic scholars and industry experts.

Warnings of “corruption and incompetence coming together,” as economists William Lazonick and Öner Tulum study the race to end the pandemic.

With Pat Gelsinger at the helm, Intel’s fate will be decided by whether it can revive its innovation-driven legacy or remain a cautionary tale of financial mismanagement.

The idea that businesses are run to maximize profits for shareholders is just plain wrong, says William Lazonick

EEO-1 employment data document the vast over-representation of Asian Americans and vast under-representation of African Americans at tech companies in recent years. How did this happen?

Umass Lowell Economics professor William Lazonick, outlines the history of how government and economic conditions favored the rise of a Black blue-collar middle class from the 1960”s to the 1970’s, and how shifts in policy and in the economy caused its unmaking from the 1980’s onwards.

Economists honored for their work on contract theory, which has important implications for issues such as executive compensation that have been a focus of Institute research

New technologies are not the problem. It’s a system distorted by a flawed ideology.

China’s successful technological development path stands in contrast to the corporate financialization model in the United States

Hedge fund managers are pushing American firms to play Wall Street games instead of investing in technologies of the future. China doesn’t have that problem.

Economics has a race problem.

We need to ban stock buybacks, while building a movement for basic economic rights

The plight of white blue-collar workers is well-known, but Blacks in that category were feeling the squeeze long before their white counterparts.

Stock buybacks come at the cost of technological innovation

EEO-1 employment data document the vast over-representation of Asian Americans and vast under-representation of African Americans at tech companies in recent years. How did this happen?

Once again, an out-of-control industry is threatening public health on a mammoth scale

White House contenders ignore root causes threatening the program, potentially worsened by cuts. Is it due to reliance on wealthy donors?

Young Scholars based in Latin America are invited to convene in Buenos Aires. The event serves to strengthen the Latin American network of new economic thinkers pursuing a new economic paradigm. Attendees will be able to enjoy several partner events during the same week.

Few would argue that America’s fortunes rise and fall on its ability to generate technological innovations — to put bold ideas to work and then bring them to market.

William Lazonick has shown how the doctrine of “shareholder value” has hurt wages in the United States. But in Latin America, where family corporations dominate, the story is more complicated.

Researchers reveal the enemies to stability and prosperity that threaten us all.

Wealthy predators are playing stock market games with companies needed to develop and produce clean technology