Subject: Re: a stocks and dividends question
From: "Benjamin J. Tilly " <>
Date: Mon, 13 Jan 2003 09:03:57 +0500

"Stephen J. Turnbull" <> wrote:
> >>>>> "Lynn" == Lynn Winebarger <> writes:
>     Lynn>     Small quote from there:
>     sjt> Second, the wealth is productively invested, rather than
>     sjt> simply bank float that cannot be productive.
>     Lynn> Now, how do you know the wealth is productively invested?
> It's an assumption.  In general, somewhat justified by the reality
> that investor oversight is more or less effective.

Sometimes less than more it seems from some of the
scandals out there...

> But think about it.  Robin, Ben, and Tom write like managements are
> the enemy and untrustworthy.  Huh?  Ain't this FSB?  As Pogo says, "we
> have met the enemy, and he is us."  I think in this context it's
> reasonable to assume that _we_ are productive and _our_ investors
> won't have too much difficulty getting straght numbers from us.

I cannot speak for Robin or Tom.  But I don't think that
my position is at all puzzling or counter to standard
economic theory.

Each person in an organization has their own interests.
Hopefully to a large extent they are aligned with that of
the other members of the organization.  But we all know
stories where managers have been more interested in
pursuing empire-building than in making sure that the
company they are in does well.  Refusal to acknowledge
this does not eliminate the problem - it merely makes
you unable to address it within your own organization...

In fact this problem is often cited as a good reason for
stock options.  Because the use of stock as incentive
aligns the interests of employees more closely with that
of owners.  Of course the alignment is not perfect since
it is in the interest of employees to see themselves
awarded with virtually all of the stock, and that most
emphatically is not in the interest of the existing

I probably should avoid discussion of what I think of
the current trend towards ballooning CEO compensation
without corresponding evidence of improved performance...

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