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That's the whole point of a joint stock company. If capital is never returned to investors, why would they invest in the company in the first place?
by joelwilliamson 6y ago
That's the whole point of a joint stock company. If capital is never returned to investors, why would they invest in the company in the first place?
- SQueeeeeL 6y agoI think stock is supposed to be like gold, you invest in the value of gold. As long as it's a valuable asset, there will be demand. The idea of explicitly returning value to investors wasn't common until the 1980s
- joelwilliamson 6y ago> The idea of explicitly returning value to investors wasn't common until the 1980s Dividends were very common pre-1980. What makes you think they weren't? > I think stock is supposed to be like gold, you invest in the value of gold. The value of a stock comes from the possibility of capital return from the company. If the company never gives anything to shareholders, the value of a stock is no more than the paper it's printed on.
- SQueeeeeL 6y agoI was mostly talking about stock buybacks https://www.forbes.com/sites/aalsin/2017/02/28/shareholders-should-be-required-to-vote-on-stock-buybacks/?sh=5a5d42806b1e https://www.forbes.com/sites/aalsin/2017/02/28/shareholders-... Dividends were often a very small piece of a companies expenses, just to incentivize long term holding of shares, not short term seeking of profits
- joelwilliamson 6y agoA buyback is just a way to structure a dividend for better tax treatment. Do stock buybacks and dividends form a larger fraction of corporate earnings now than they did historically?