In the event of liquidation, shareholders are on the list of those owed a portion of the proceeds. In fact they are last on the list, after creditors (those who

In the event of liquidation, shareholders are on the list of those owed a portion of the proceeds. In fact they are last on the list, after creditors (those who have loaned the company money directly), bondholders (bonds are a form of debt), and holders of preferred stock. That right is the ultimate determinant of the value of a no-dividend no-vote stock: fractional ownership of the right to proceeds in the event of liquidation, after those above have had theirs. As a higher-risk asset, it produces greater returns, since otherwise there is an arbitrage: buy bonds issued by the same company instead. This arbitrage lasts until the bond becomes "expensive", and therefore produces worse returns (since its payout is independent of its price).