2 ms·
Because it encourages longer-term ownership, and gives shareholders a stake in the future cash flows of the business. Like I said, it's the tax treatment that
by disgruntledphd2 3y ago
Because it encourages longer-term ownership, and gives shareholders a stake in the future cash flows of the business.
Like I said, it's the tax treatment that basically stopped growth companies giving dividends. I think that we should change said tax treatment and also make buybacks illegal but that's a bit more controversial.
In any case, for both G and FB, they'd need to do buybacks anyway because of their employee share programs.
- konschubert 3y agoBuybacks have the same effect of encouraging long-term ownership. Given a certain amount of money, spending it on stock buybacks vs spending it on dividends returns the same amount of money to each HOLDING shareholder. In one case, they receive a small sum. In the other case, the value of their stock goes up.