Financial Times (July 27)
“Ending the tyranny of quarterly earnings is an idea that is on the march. The case for reforming shareholder capitalism is strong.” An “investment drought” is resulting from the focus on short-termism. “With healthy profits and a near zero cost of capital, now ought to be the time to lay down plans for the future. Today’s investments yield tomorrow’s dividends. But listed companies are almost uniformly opting for dividends today.” In the U.S., leading listed companies are, on average, investing only one dollar for every $8-$9 they return to shareholders.
Tags: Cost of capital, Drought, Future. Dividends, Investment, Profits, Quarterly earnings, Shareholder capitalism, Shareholders, Short-termism, U.S.
Institutional Investor (May 8)
M&A appears poised to hit new highs. “Announced global deals this year have already hit $1 trillion as of the end of March, one of the highest quarterly levels since 1998 and almost double the level announced for the same period a year ago. The trend is reaching across industries and regional markets.” Several factors are driving the boom? M&A “reduces the uncertainty as to how surplus capital will get put to work and, with the cost of capital so low, raises the odds that acquisitions can boost future earnings growth.”
Tags: Acquisitions, Cost of capital, Earnings growth, Global deals, M&A, Surplus capital, Uncertainty
