Corporations expands,merge,splits,sell & buy shares.Why they do not give benefit to shareholders?

Question

This has reference to Forb's list of millioners.It keeps expanding.I wonder co.s like Microsoft,Google,IBM,Intel etc.why they are giving only meagre benefit to shareholders with whose money they are dong business ! They give amass of money to their employees and CEOs.Is there no law any?

Compare the No.of Dividend paying co.s(Of similar earnings)of US, China and India.I believe American co.s are more conservative.Why?Is there any statistical study?

Common investors have no say.Directors are appointed without enough proxy votes and to form a cocus who take convinient decisions to their advantage.Co.s keep expanding true but employees and CEOs keep making money,not common shareholders.They keep on,keep on waiting.In the mean time political storms,regional imbalances,recessions come in and all of a sudden co.is doomed (e.g.Intel,Dell,Microsoft etc) and the common shareholder is killed.The only who do not loose are employees and CEOS.(Evenif some employees are retrenched,they have made lots of money by then).Is there some authority to look at it?

Answer 1

Ashok,

Your question is certainly interesting but does not reflect an understanding of business and taxes in the U.S. For one thing, dividends until recently were heavily taxed both to the corporate payer and to the shareholder recipient. The double taxation at high tax rates is not good efficient use of capital.

Secondly, the shareholders of these company's are the owners of the businesses and if they wanted more dividends they could vote this for themselves.

Thirdly, if the company can reinvest the funds at a better rate of return than the shareholders can, the best course of action is for earnings to be retained and reinvested inside the business. Companies you reference MSFT, GOOG, INTC generally have this ability and fit this practice.

Best,
Dana B.

Answer 2

It is just a way for the rich to get even richer. It is a rip-off to let them use your investment and you don't have any direct input. But what do I know I don't invest. It makes sense for me not to invest. I don't need the aggravation.