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Why do people always suggest that shareholders should be the first to benefit from company profits? Shareholders don't do anything to create value. Apple doesn
by Osiris 10y ago
Why do people always suggest that shareholders should be the first to benefit from company profits? Shareholders don't do anything to create value. Apple doesn't benefit at all when someone buys or sells their shares.
Why do companies not disburse excess profits like this to those that were responsible for creating the value in the first place?
- deleted 10y ago[deleted]
- ethbro 10y agoBecause ultimately shareholders (barring kooky Google stock arrangements) own the company. Practically, they select board members (Apple recently added the "3%+ stakeholders may nominate new members" clause), who select the CEO, who would propose and implement such a scheme. So distributing it to employees, while noble and just (imo) would require shareholders to vote against their own immediate interests. In practice, there's probably some friction, but you can damn well believe with numbers this large Tim Cook would be sued in a heartbeat if he attempted to implement such a scheme.
- portent 10y agoHere you are confusing the secondary market for shares (an existing shareholder selling to someone else) with the primary market (new issuance of shares). The primary market for shares absolutely benefits companies by giving them large amounts of cash now, in return for a claim on future earnings. This can allow a company to create more value than it otherwise would be able to do. The secondary market is mainly a benefit to shareholders, not companies; but without a liquid secondary market, there would be fewer people willing to invest in the primary market.
- kgwgk 10y agoShareholders are not the first to benefit, they are the last to benefit. Profits are by definition what remains after everyone else has taken their part, if anything.
- valuearb 10y agoTry creating value without shareholders. Most companies would exist, or wouldn't be as successful, without them. Jobs + Woz created the Apple II, investors funded inventories, production, marketing, and everything else.
- sauronlord 10y agoWhat are you talking about. Shareholders own the business and appoint the directors to make decisions. It's their business and presumably want a return on their money.