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The whole point of owning part of a company is to collect dividends and/or sell your shares for more than you bought them for. But without going public, it can

The whole point of owning part of a company is to collect dividends and/or sell your shares for more than you bought them for. But without going public, it can be difficult to do the latter.

zaksoup 8y ago
This doesn't seem true. What about having voting rights on board members/company direction? How do worker-owned co-ops even function if this is the 'whole point of owning part of a company'. Why do we take 'maximize shareholder value' as though it's some rule handed down by god and the only possible way to operate a company, public or otherwise? It just isn't the case.
- marcoperaza 8y ago
  You don’t just control a company for fun. I mean, maybe you do and more power to you, but just about everyone else votes in those elections so that the company will be better run, so that in the short/medium/long-run dividends or share price will go up.
- icebraining 8y ago
  > How do worker-owned co-ops even function if this is the 'whole point of owning part of a company'. They would work want to collect dividends - in the form of higher wages or other non-monetary compensation.
- walshemj 8y ago
  That is how worker coops work all members are share holders one member one vote.
- gwbas1c 8y ago
  Worker-owned co-ops exist to provide employment (and profit) for their employees.
whatever1 8y ago
So your argument is that the shareholders of a private need to thoroughly search for potential buyers and convince them for the value of the equity instead of just pressing "sell" on the robinhood app, that will enable random Becky to become a shareholder?
krelian 8y ago
Isn't the whole point of owning a company is have a share of its profits? That's why the stock market never made sense to me. The price and price gains or losses on stocks are not related at all to the profits.
- kerbalspacepro 8y ago
  The point of owning a company is to have a share of its profits. But when you do that, you also sign onto a multitude of risks (like the profit going out the window!) So the stock market allows you to take those risks and mitigate them in near-as-possible real time.
- harryh 8y ago
  The price and price gains or losses on stocks are not related at all to the profits. Perhaps not in the short term, but they definitely are in the long term.
- roguecoder 8y ago
  You can think of a share as a bet on the future potential value. So past value was previously reflected in the share price, but sometimes high profits mean that the growth is over because there's not useful R&D to be doing, whereas sometimes low profits mean that growth is ahead. Future performance is also highly uncertain and influenced by external factors: geopolitics, demand for the product, other competitors, outside innovation, taxation changes, people's relationship to the CEO, the marginal cost of that investment relative to other similar investments that serve as close substitutes, etc. All of that information is going to be part of the price of the stock, because all of that information influences the future of the company. Plus then since the future is unknowable, it's tied up with investor's personal risk profiles, discount factors and some straight up sentimentality. If you have a crystal ball and can predict the future perfectly, stock prices would correlate with profits, but even if the market was perfect, current profits would be related to past stock prices, not current stock prices. (Oh, and to make it more complicated and basically impossible to model with linear equations, if you own stock you can influence those future outcomes both directly via shareholder activism and indirectly via the effect you have on a company's cost of capital, so the whole system is dialectic.)

The whole point of owning part of a company is to collect dividends and/or sell your shares for more than you bought them for. But without going public, it can be difficult to do the latter.

zaksoup 8y ago

This doesn't seem true. What about having voting rights on board members/company direction? How do worker-owned co-ops even function if this is the 'whole point of owning part of a company'. Why do we take 'maximize shareholder value' as though it's some rule handed down by god and the only possible way to operate a company, public or otherwise? It just isn't the case.

marcoperaza 8y ago
You don’t just control a company for fun. I mean, maybe you do and more power to you, but just about everyone else votes in those elections so that the company will be better run, so that in the short/medium/long-run dividends or share price will go up.
icebraining 8y ago
> How do worker-owned co-ops even function if this is the 'whole point of owning part of a company'. They would work want to collect dividends - in the form of higher wages or other non-monetary compensation.
walshemj 8y ago
That is how worker coops work all members are share holders one member one vote.
gwbas1c 8y ago
Worker-owned co-ops exist to provide employment (and profit) for their employees.

whatever1 8y ago

So your argument is that the shareholders of a private need to thoroughly search for potential buyers and convince them for the value of the equity instead of just pressing "sell" on the robinhood app, that will enable random Becky to become a shareholder?

krelian 8y ago

Isn't the whole point of owning a company is have a share of its profits? That's why the stock market never made sense to me. The price and price gains or losses on stocks are not related at all to the profits.

kerbalspacepro 8y ago
The point of owning a company is to have a share of its profits. But when you do that, you also sign onto a multitude of risks (like the profit going out the window!) So the stock market allows you to take those risks and mitigate them in near-as-possible real time.
harryh 8y ago
The price and price gains or losses on stocks are not related at all to the profits. Perhaps not in the short term, but they definitely are in the long term.
roguecoder 8y ago
You can think of a share as a bet on the future potential value. So past value was previously reflected in the share price, but sometimes high profits mean that the growth is over because there's not useful R&D to be doing, whereas sometimes low profits mean that growth is ahead. Future performance is also highly uncertain and influenced by external factors: geopolitics, demand for the product, other competitors, outside innovation, taxation changes, people's relationship to the CEO, the marginal cost of that investment relative to other similar investments that serve as close substitutes, etc. All of that information is going to be part of the price of the stock, because all of that information influences the future of the company. Plus then since the future is unknowable, it's tied up with investor's personal risk profiles, discount factors and some straight up sentimentality. If you have a crystal ball and can predict the future perfectly, stock prices would correlate with profits, but even if the market was perfect, current profits would be related to past stock prices, not current stock prices. (Oh, and to make it more complicated and basically impossible to model with linear equations, if you own stock you can influence those future outcomes both directly via shareholder activism and indirectly via the effect you have on a company's cost of capital, so the whole system is dialectic.)