Said it elsewhere, but

Companies, particularly large ones, will always use unexpected excess cash for share repurchases or dividend payouts for several reasons:

1. Executives are increasingly compensated in short and long term incentives (read: they’re rewarded for the company performing well and with stock options)

2. Almost every large company does buybacks, something like 94% of the companies on the S&P 500 had done a share buyback in the preceding year as of like 2017, because

3. Share buybacks help inflate performance metrics, which is essential since most of your competition is doing them (and since executives are rewarded on the basis of ‘company performance’…)

Gotta hand it to good old saint Regan sticking a fucking investment banker in charge of the SEC, because that’s how these became legal; prior to that, they were EXTREMELY regulated and basically impossible to do.

Firms which are already listed on stock exchanges and are sizeable (or at least comparable to their competitors), will generally use unexpected cash for more shortsighted purposes; this is typically partially because of the aforementioned stuff, but also because firms have generally already laid out budgets and ‘planning’ for the next few years.

That cash windfall is not useless, but for a given corporation is not immediately useful; it’s not earning anything, it’s not doing anything, it’s just ‘there’. So many executives see the greatest immediate ROI as the best use of it (unless they have a crises elsewhere), and that typically is (surprise) share buybacks. It could also be used as collateral to take out loans when interest rates and LIBOR were still verrryyy low, the loans then being used to do the buyback (I imagine that is less common currently).

Which just shows how capitalist economics is kind of irreparably broken. Shareholders are rewarded, financial brokers/investment firms will consider it a good use of capital which helps boost the stock, the firm itself benefits from performing the buyback as it will compare more favorably to its peers than if it did not, and it gains back stock it can reissue at a later date (not to mention the executives giving themselves bonuses, essentially). So it is a fantastic short term use of capital.

But of course, nothing tangible is produced, workers gain little to nothing (unless they are one of the very rare firms that also compensate workers via stock options), and consumers will likely not see any benefit themselves.

It could be declared illegal again, but good luck putting that genie back in the bottle when damn near every firm on the NYSE does share buybacks