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A comment on Companies Use Borrowed Billions to Buy Back Stock, Not to Invest. Parent comment

Re:Companies Use Borrowed Billions to Buy Back Stock, Not to... by gridlockd on Sunday August 11, 2019 @10:56AM (#20668431)
> Remember, preserving the corporation is not the goal; maximizing value to the shareholders is the goal.

Preserving the the company is generally quite important in order to maximize value.

The "maximizing value" provision doesn't imply "in the short term", unless for some reason all the value is only in the short term.

If this wasn't the case, no company could ever invest in anything, because that lowers the short-term value.

Of course in practice the short term is often given preference, but that's not because of the provision.

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Re:Companies Use Borrowed Billions to Buy Back Stock, Not to... by pfdietz on Sunday August 11, 2019 @12:43PM (#20668968)
> Preserving the the company is generally quite important in order to maximize value.

Often it is, but not always. If the market for the company's product is going away it may make sense to just ride things down to the end, milking as much as they can as they die.

Monetizing other value in the company may also be possible, of course. The corporation could be purchased, or its parts could be sold in liquidation. The point is that survival of the corporation is not an end in itself, it's only relevant insofar as its maximizes shareholder value.

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