ni-co Posted August 6, 2014 Share Posted August 6, 2014 There are two decisions most companies make that I don't understand at all: [*]They pay a dividend instead of investing the money or buying back (undervalued) stock; [*]they optimize for high earnings – which normally get taxed at a high rate – instead of optimizing for cashflow that is immediately reinvested into growth (think John Malone). There is no doubt in my mind that over longer periods of time both decisions have huge detrimental impacts on shareholder value building up within these companies because of the law of compounding. A. Why do they do it? B. Why do shareholders demand it (if this is your answer to A.)? Link to comment Share on other sites More sharing options...
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