The Department has noted several significant share buyback announcements in recent months. These can be undertaken for a variety of reasons such as providing a flexible tool for returning excess cash to shareholders and offsetting dilution arising from the issue of new shares such as those issued to employees under employee share ownership schemes. Buyback activity tends to fluctuate, responding to company-specific and wider economic conditions such as the interest rate environment.
The Department commissioned research to further its understanding of longer-term trends in share buybacks, how and why companies make use of them and whether they are being misused to hit performance targets and inflate executive pay. The Department is currently considering this research and will be making an announcement in due course.