THE DOWNSIDES OF STOCK BUYBACKS: Long-term use of stock buybacks can result in negative stockholders' equity, potentially resulting in a number of financial challenges.

The article discusses the downsides of long-term use of stock buybacks including negative stockholder equity and financial challenges. Topics discussed include purposes of buybacks, impact of stock buybacks on return on equity (ROE), trends in the stockholders' equity and ROE of home improvement retail corporation Home Depot, accounting of stock buybacks using the retirement and cost methods, and operating income return on assets (ROA) as substitute of ROE.