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> Pile up money during the good years to allow themselves to not need continued outside income to keep going, so they can do what is right instead of compromisi
by Terr_ 1y ago
> Pile up money during the good years to allow themselves to not need continued outside income to keep going, so they can do what is right instead of compromising their vision for the sake of hitting quarterly earnings.
Typically, individuals want to pile up money so that they don't need outside income to keep going, and the shareholders of a "quarterly earnings" company will squeeze the entity to get it for themselves in the form of dividends or higher share-price.
- Panzer04 1y agoMoney locked up in companies is managed at the leisure of its management, regardless of how good that might be for anyone else (ie. the shareholding owners). Money sitting there doing nothing is a poor use of it, so most companies are encouraged to run with only enough working capital to keep operations going. It sounds weird, but this is better for shareholders and the economy (and companies can raise capital as needed down the line) than having all companies hold 3x the cash on the balance sheet. The argument would be different for a foundation by wikipedia, albeit you still have problems between what the wikipedia management might want (high wages, little accountability) and everyone else.
- warkdarrior 1y ago> Money locked up in companies is managed at the leisure of its management, regardless of how good that might be for [...] the shareholding owners But the management is aware that the shareholders can apply (direct or indirect) pressure for the money to be used in certain ways. Ultimately the shareholder can sue the management if they think the money is misused.
- Panzer04 1y agoIn the ideal case, but shareholders are distributed and often it's nontrivial to get enough involved to justify the effort and expense.