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> When a company has cash that it can't invest as profitably as its shareholders could do on their own, it's obligated to pay it to them as a dividend. It's the
by klyrs 4y ago
> When a company has cash that it can't invest as profitably as its shareholders could do on their own, it's obligated to pay it to them as a dividend. It's their money.
I'd love to see a source for this. What is the precise nature of this obligation, and who enforces it?
- djbebs 4y agoThere is no obligation
- kasey_junk 4y agoObligation isn’t the right word. There is an “expectation” and it’s enforced by the markets.
- Cupertino95014 4y agoCorrect, sorry. It's "enforced" by people selling the stock, or, if they're really rich, trying to buy the company and force changes.
- mumblemumble 4y agoI think that the commenter was asserting an ethical obligation, not a legal or contractual one. In other words, it was a statement of opinion. You can't really [citation needed] opinions like that.
- danielfoster 4y agoPublicly-traded companies are expected to act in the best interest of their shareholders, which includes the obligation to make the best use of free cash. This is Business Law 101. Management is generally given huge leeway here and shareholders will usually vote with their feet as has happened with Meta.
- Cupertino95014 4y agoCorrect. If you're a shareholder, you can either sue, while you have "standing," or you can just sell and preserve your money. Even if you sue, you probably wouldn't win, and it would be horrendously expensive.
- deleted 4y ago[deleted]