Value for Shareholders
It is a debate whether a company should create actual value for their shareholders or not.

Here are some tangible ways it can do so:

  1. Acquisitions.

By acquiring another company, an enterprise adds revenue/operating income/net income for shareholders and may actually inflate its future expectations.

Beware of cash misusage and issuing stock for the purchase.

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  1. Paying Dividends.

This is the most tangible way a company can create value for their shareholders. It puts money in their pockets.

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  1. Repurchase of Stocks.

By buying back shares, a company diminishes the amount in circulation, which in turn, increases the price per share.

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Ben's avatar
Good to see google on that list 4 times.
Giuliano's avatar
@rpinvestments Google has the best track record on acquisitions. It's capital allocation skills has been impressive.
Joey Hirendernath's avatar
Google is like the Pacman of acquisitions here
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Rihard Jarc's avatar
I wonder if anyone has any stats on the % of stock vs cash deals in M&A in the recent years. Would be interesting to see.
Giuliano's avatar
@rihardjarc mmm I've never seen that information gathered.
Rihard Jarc's avatar
@giuliano_mana Yeah I haven't spotted it either but would tell an interesting story on how companies value their cash vs stock in different periods.
Nathan Worden's avatar
Woah, it's been so long since the DoubleClick acquisition it wasn't really on my radar. That was a huge deal in 2007.

New York Times article about it: