French companies benefiting from state aid can't buy back shares

Post by hnarn » Mon, Mar 30, 2020, 11:00 AM UTC

Taniwha wrote: post #70

btrask wrote: post #56

Earlier quoted context omitted.

Okay, but why is buying a company's stock not the same as bailing it out? If you're "investing" in the business, why does money have to be given to them directly, using a completely different mechanism?

Plain buying a company's shares gives no money to the company, just to its shareholders Buying new shares from the company in exchange for bailout money dilutes the value of existing shares (not necessarily a bad thing, the investors bet on a company that wasn't prepared for such a downturn). Of course companies that have done stock buybacks could sell stock on the open market with roughly the same effect. Buying deb…

Post by Havoc » Mon, Mar 30, 2020, 11:04 AM UTC

Post by imtringued » Mon, Mar 30, 2020, 11:08 AM UTC

Mengkudulangsat wrote: post #45

pianom4n wrote: post #25

Earlier quoted context omitted.

It's exactly the same as a dividend, except the tax consequences are opt-in for shareholders. Only those who sell their shares are affected, unlike dividends which are equivalent to forcing all shareholders to sell an equal portion. Buybacks are just tax efficient dividends, and all of the hate against them is from people who don't realize this and haven't thought through the math. In the article it says this rule ap…

The rage against buybacks is how many are funded - through debt. Boards are gearing their companies to the hilt to fund shareholder returns (in whatever form), to the point the ship itself is rendered unable to whether significant storms. If bailouts are normalized, there is no disincentive against such reckless behavior. I would like there to be permanent cash buffers to fund 1 year HR costs before any form of share…

Post by gwd » Mon, Mar 30, 2020, 11:13 AM UTC

pjc50 wrote: post #17

redis_mlc wrote: post #4

Prediction: that won't be a precondition in the USA, and if it was, most companies would decline the aid. You see, buybacks are "that one weird trick" where you can steal from the market, by inflating the EPS and hence your employee stock options, and not go to jail.

I agree with the first sentence but not the second; buybacks aren't "stealing from the market", they're returning money to the market but "stealing" from the revenue service . The tax treatment of dividends is less favourable. Executive total compensation is a wider problem, but shareholders seems generally satisfied with letting boards have almost as much of the company money as they want. Only people who really tak…

Post by sametmax » Mon, Mar 30, 2020, 11:18 AM UTC

smt88 wrote: post #72

sametmax wrote: post #58

Earlier quoted context omitted.

Investing is privatizing the risks and the benefits. Bailing out is privatizing the benefits but mutualizing the risks. It's taking what favors you from both capitalism and socialism, call that a free market, and pretend it's for the common good. You always win. People says communism didn't work looking at Russia and China. But the ruling class will abuse any system to the point it doesn't look like the original idea…

Communism and capitalism do share a weakness: corruption of those with power. One difference between them is that a dangerous concentration of power is inherent to communism. It's intentional. In capitalism, it's an unintended consequence that can be mitigated by regulations (anti-trust laws, subsidies to startups, etc.)