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Denmark: No aid for companies which pay out dividends or are reg. in tax havens

bloomberg.com

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Re: Denmark: No aid for companies which pay out dividends or are reg. in tax havens

#11

Post by Ididntdothis »

Nextgrid wrote: post #2

Maybe I'm not understanding something but why do they consider paying dividends as something bad? They are essentially excluding the majority of businesses using this criteria.

If they have the money to pay out dividends then they shouldn’t need bailouts.

Re: Denmark: No aid for companies which pay out dividends or are reg. in tax havens

#13

Post by FartyMcFarter »

Nextgrid wrote: post #2

Maybe I'm not understanding something but why do they consider paying dividends as something bad? They are essentially excluding the majority of businesses using this criteria.

I guess it depends on whether that restriction is for past dividends or ones after the crisis has started?

I certainly don't think it would be appropriate to bail out a company that's throwing money out the window unnecessarily.

Re: Denmark: No aid for companies which pay out dividends or are reg. in tax havens

#14

Post by DCKing »

Nextgrid wrote: post #2

Maybe I'm not understanding something but why do they consider paying dividends as something bad? They are essentially excluding the majority of businesses using this criteria.

These measures don't imply that paying out dividends is "bad" at all?

Re: Denmark: No aid for companies which pay out dividends or are reg. in tax havens

#15

Post by tsbinz »

Nextgrid wrote: post #2

Maybe I'm not understanding something but why do they consider paying dividends as something bad? They are essentially excluding the majority of businesses using this criteria.

You pay out dividends or buy back shares if you have surplus cash, and it's hard to convey to voters that businesses with surplus cash need help I guess.

Re: Denmark: No aid for companies which pay out dividends or are reg. in tax havens

#17

Post by formercoder »

Nextgrid wrote: post #2

Maybe I'm not understanding something but why do they consider paying dividends as something bad? They are essentially excluding the majority of businesses using this criteria.

Not sure if these are loans or grants or exactly how it works, but I could see prohibiting dividends for some period after the aid. Firms should not be making distributions when they are receiving aid. But prohibiting any firm that has paid dividends is insane.

Re: Denmark: No aid for companies which pay out dividends or are reg. in tax havens

#18

Post by nokicky »

Nextgrid wrote: post #2

Maybe I'm not understanding something but why do they consider paying dividends as something bad? They are essentially excluding the majority of businesses using this criteria.

The thinking goes: A business should have enough cash to weather a storm. If you've paid out cash you have more than enough to weather a storm (and therefore don't need money). If you need money and have paid out dividends than you shouldn't have, you didn't have enough cash reserve.

Re: Denmark: No aid for companies which pay out dividends or are reg. in tax havens

#20

Post by JoshTriplett »

Nextgrid wrote: post #2

Maybe I'm not understanding something but why do they consider paying dividends as something bad? They are essentially excluding the majority of businesses using this criteria.

The implication is that companies should not be using the aid money to pay dividends or buy back stock, because the aid is intended to help pay employees or otherwise remain operational, not to pass through to stockholders.

The article doesn't make clear whether they're using past behavior (what they did with previous government aid), present behavior (are they currently a public company established as paying dividends), or future behavior (an agreement not to pay dividends or buy back stock, in order to receive aid).

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