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Friday, October 8, 2010

More on Cash Hoarding

Oct. 8th, 2010

Over at Mother Jones, Kevin Drum writes a spirited piece on this week's profit news:

"I've always hated companies that do share buybacks. I know all the arguments in favor of it, but as far as I'm concerned it's nothing more than a desperate effort to curry favor with shareholders and meet short-term bonus targets, carried out by a management team that has no idea how to grow their business. And if they don't know how to grow their business, they should just announce that they've decided to adopt the corporate model of a regulated utility and start paying out regular, steadily growing dividends."

Perhaps he's correct. The very concept of risk for expansion may be lost on these executives. It begs the question, what the hell are we teaching in our business schools today.

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