Subject: RE: a stocks and dividends question
From: "Larry M. Augustin" <lma@lmaugustin.com>
Date: Fri, 10 Jan 2003 06:39:23 -0800

 Fri, 10 Jan 2003 06:39:23 -0800
> Stephen J. Turnbull writes
> 
> >>>>> "robin" == robin  <robin@roblimo.com> writes:
> 
>     >> From that financial perspective, stock valuation, if it isn't a
>     >> pyramid scheme, has to be rooted in expected dividends.
> 
>     robin> Well, yes.
> 
> Well, no.  There must be the  potential  for dividends, but there is
> no reason why the investors must call in that potential.  This will
> depend on details of the company's strategy, etc.  Consider a startup
> targeting being bought out by a large competitor as an extreme case.

A startup being bought by a competitor is not such an extreme case.  Cash
held by a corporation can be returned to investors in many ways.
Acquisition is a very common one.  Simply shutting down, selling off assets,
and returning the remaining cash to investors is another.

The key point in this thread (and I would agree) is that taxing dividends
differently distorts corporate behavior by discouraging dividends.

Larry