This term, I'm teaching intermediate corporate finance. One of the class discussions was about the firm's decisions about the allocation of their retained earnings. Well, it turns out that more and more of such allocations is shifting towards dividend payments and share repurchase. On the politics side, with governments' support of research and development projects, firms find it more appealing to spend cash on repurchase and thus lobby for more government funding particularly for the kind of research that they had to traditionally fund out of their own pockets. Intel, for example, spends four times on share buyback as it receives from the government in the form of the research funds. This video on HBS is enlightening [link].
