Dividend Decisions at the Parent Company Level

Many corporate managers reason very much along with these lines in determining whether subsidiary should distribute earnings to their parent company. Many corporations that consistently show good returns have indeed employed a large portion of their retained earnings on an economically unattractive even disastrous basis. Over time, disreputable earnings that have been withheld by managers should earn their keep. The companies in which we have our largest investments have all engaged in significant stock repurchases at times when wide discrepancies existed between price and value. When companies purchase their own stock, they often find it easy to get $2 of present value for $1.