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Here's another explanation. After companies get to a certain size, they can't deploy capital as efficiently. The low hanging fruit is gone, they have more princ

Here's another explanation. After companies get to a certain size, they can't deploy capital as efficiently. The low hanging fruit is gone, they have more principal-agent problems, and lots of waste. The responsible thing to do is give it back to shareholders who can invest it in countries and enterprises that generate a better risk adjusted return. Boards invent the CEOs to do this rather than waste capital.

skybrian 9y ago
I know what you mean but I'm not sure I'd throw "waste" around so casually. Wages are not waste, from the employee's point of view. From a utilitarian point of view, it's not at all clear that the money would be less "wasted" if given to stockholders.
- chillydawg 9y ago
  Of course wages are not waste. Corporate mergers for purposes of CV building and vanity are waste, and are the hallmarks of a company sitting on too much cash. Run your business properly and give any surplus profits to the owners.
  - notfromhere 9y ago
    The trend has been to both squeeze wages and engage in corporate buybacks, usually with the justification that the company can't afford to raise wages (which is obviously bullshit given how wastefully profits are used)
- mathattack 9y ago
  I'm not thinking wages. I'm thinking corporate jets, M&A that feeds ego while costing shareholders ($) and employees (jobs), and pet R&D projects that go nowhere due to corporate bureaucracy. From personal experience, let's add: rewriting a memo a dozen times because the corporate VP had to approve a fax machine that wasn't on the "Deployable Technology List." (This from a company currently in a high profile proxy fight)