TIP654: Investing Across the Life Cycle w/ Aswath Damodaran
We Study Billionaires - The Investor’s Podcast Network
Understand Your Stakeholders' Preferences
Different shareholder groups have distinct interests that influence their preferences for dividends and stock buybacks. Institutional investors and pension funds typically favor dividends, while wealthier shareholders often prefer stock buybacks due to the potential for price appreciation. Companies should consider their shareholder composition when deciding on payout strategies. For instance, telecom firms with a larger proportion of poorer shareholders might benefit from paying out dividends, while tech companies may lean towards buybacks. Additionally, shareholders lack contractual protections unlike other stakeholders such as employees and lenders. This makes it crucial for companies to prioritize shareholder returns to ensure ongoing investment; failure to do so may leave shareholders with diminished value after obligations to other stakeholders have been met.
