Corporations may not have a legal obligation to maximise shareholder profits. But the belief that they must do everything (within the law) to make money is certainly widespread. Of the ‘Big Five’ publishers, four are public companies. Regardless of their legal obligations, they must keep their shareholders happy. And shareholders are usually made happy through a) increased share price, b) fat dividends or c) a combination of the above.
Smart investors, of course, are those who are in it for the long-term. Who want any increase in share price to be one which reflects an increase in the value of the underlying company. Who want any increase in dividends to reflect an increase in the company’s profits.
‘Surely, increased share prices are good?’ I hear you say. Or, ‘Who wouldn’t want to receive a nice big dividend?’
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