Description: The federal government is set to introduce a 2% tax on stock buybacks. The government hopes this move will encourage companies to reinvest their profits in order to grow and benefit the Canadian economy, rather than buying back shares with excess cash. Kim Forrest of Bokeh Capital Partners does not believe the 2% penalty will be enough to influence behaviour.
Date: November 4, 2022
1) Does your university have an investment club or dedicated investments course where you trade in real money? If so, has the fund benefited from stock buybacks?
2) Do you think the government should do something to discourage stock buybacks?
3) Page 11-9 of Wiley’s Financial Accounting: Tools for Business Decision-Making talks about stock buybacks in Canada in the inset box “Accounting Matters.” Which Canadian company was the leader in this practice according to the inset box?