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Given that: 1. Some publicly traded companies have been sued for not maximizing shareholder value. 2. Not utilizing all of tax exempt vehicles provided to the

Given that: 1. Some publicly traded companies have been sued for not maximizing shareholder value. 2. Not utilizing all of tax exempt vehicles provided to them could be counted as not maximizing shareholder value, unless of course there is a better investment they can make with their cash pile. 3. Given inflation of 1.5%, $100 billions in cash that Apple has would be losing $1.5 billions per year in terms of buying power. So not investing it is paramount to loosing money. I really do not see how can anyone can claim that companies are evil for doing this. They merely operate in framework set up for them. This also raises interesting point that it would be illegal to try to repatriate gigantic cash supplies they have because that would definitely go against maximizing shareholder value.

smileysteve 13y ago
But a share buyback has about 8x the predicted return.
- TrainedMonkey 13y ago
  Would require repatriation of money.
magicalist 13y ago
There is no requirement that companies maximize shareholder value. At best you might be able to hold them to something in their charter, but generally lawsuits attempting this are thrown out pretty quickly, and even if it's not, except in cases of blatant mismanagement, it's difficult to prove that someone else there would done better with different decisions. I know this meme is persistent, but it's really not true. If it were, you'd end up with ridiculous situations, like every company with a down quarter would be sued in an effort to get a windfall out of a loss.
- snowwrestler 13y ago
  Agreed. One reference: http://hbr.org/2010/04/the-myth-of-shareholder-capitalism/ar/1 http://hbr.org/2010/04/the-myth-of-shareholder-capitalism/ar...
steven2012 13y ago
There is zero legal basis to sue a company for not maximizing shareholder value. A company does not have the legal obligation to maximize shareholder value. Of course, anyone can sue for any reason, and I'm sure companies may have been sued over something as dumb as this, but they won't win, unless there is fraud/negligence involved. Not deciding to put money into alternative investments is not an issue of maximizing shareholder value.

smileysteve 13y ago

But a share buyback has about 8x the predicted return.

TrainedMonkey 13y ago
Would require repatriation of money.

magicalist 13y ago

There is no requirement that companies maximize shareholder value. At best you might be able to hold them to something in their charter, but generally lawsuits attempting this are thrown out pretty quickly, and even if it's not, except in cases of blatant mismanagement, it's difficult to prove that someone else there would done better with different decisions. I know this meme is persistent, but it's really not true. If it were, you'd end up with ridiculous situations, like every company with a down quarter would be sued in an effort to get a windfall out of a loss.

snowwrestler 13y ago
Agreed. One reference: http://hbr.org/2010/04/the-myth-of-shareholder-capitalism/ar/1 http://hbr.org/2010/04/the-myth-of-shareholder-capitalism/ar...

steven2012 13y ago

There is zero legal basis to sue a company for not maximizing shareholder value. A company does not have the legal obligation to maximize shareholder value. Of course, anyone can sue for any reason, and I'm sure companies may have been sued over something as dumb as this, but they won't win, unless there is fraud/negligence involved. Not deciding to put money into alternative investments is not an issue of maximizing shareholder value.