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> Why not set it to $X of profit? Probably because management can deliberately reduce profit, and realize shareholder gains in other ways. Amazon famously had

by 394549 8y ago

> Why not set it to $X of profit? Probably because management can deliberately reduce profit, and realize shareholder gains in other ways. Amazon famously had very small profits over a long period of time because it reinvested all of its revenues back into its business: https://qz.com/987559/charted-amazons-amzn-profitless-path-to-world-domination-over-the-past-20-years/ https://qz.com/987559/charted-amazons-amzn-profitless-path-t... https://qz.com/1196256/it-took-amazon-amzn-14-years-to-make-as-much-net-profit-as-it-did-in-the-fourth-quarter-of-2017/ https://qz.com/1196256/it-took-amazon-amzn-14-years-to-make-...

thatswrong0 8y ago
> Amazon famously had very small profits over a long period of time because it reinvested all of its revenues back into its business That's very different from deliberately reducing profit for the sake of the shareholders though. Making capital investments for the sake of growing a company.. should be desired, no?
- news_to_me 8y ago
  It's hard to legislate that distinction without getting messy, though. Hollywood, for example, is famous for the tax hoops they jump through to make it look like blockbusters lose money so they can avoid taxes.
  - thatswrong0 8y ago
    From a top Quora answer: > Hollywood accounting isn't about avoiding taxes, studios still pay taxes on revenue whether a film makes a dollar or a billion dollars. > What hollywood accounting does is shift costs around to avoid paying royalties and avoid contractual obligations of profit sharing. I really don't think dealing with profit vs. revenue would be messy at all.
    - news_to_me 8y ago
      I could be wrong about the specifics of Hollywood accounting, but I don't think it's hard to imagine similar techniques being used to circumvent tax laws based on profit. Also, would you please link to the Quora page you referenced?

by 394549 8y ago

thatswrong0 8y ago

> Amazon famously had very small profits over a long period of time because it reinvested all of its revenues back into its business That's very different from deliberately reducing profit for the sake of the shareholders though. Making capital investments for the sake of growing a company.. should be desired, no?

news_to_me 8y ago
It's hard to legislate that distinction without getting messy, though. Hollywood, for example, is famous for the tax hoops they jump through to make it look like blockbusters lose money so they can avoid taxes.
- thatswrong0 8y ago
  From a top Quora answer: > Hollywood accounting isn't about avoiding taxes, studios still pay taxes on revenue whether a film makes a dollar or a billion dollars. > What hollywood accounting does is shift costs around to avoid paying royalties and avoid contractual obligations of profit sharing. I really don't think dealing with profit vs. revenue would be messy at all.
  - news_to_me 8y ago
    I could be wrong about the specifics of Hollywood accounting, but I don't think it's hard to imagine similar techniques being used to circumvent tax laws based on profit. Also, would you please link to the Quora page you referenced?