Pragmatic Capitalism

Capital for Living a More Practical Life

‘Corporate Finance’

Let’s Talk About “Maximizing Shareholder Value”

The idea of “maximizing shareholder value” (MSV) has been in the news a lot lately (see here and here). This is an idea generally associated with free market capitalism that states corporations should be run primarily for the purpose of maximizing the value they create for owners. This might not seem like a controversial idea, but many commentators argue… Read More

QE, Stock Buybacks and Other Stuff

Did QE work?  That remains one of the most common questions in finance and economics. My answer is simple – it depends! I know, that’s not a super helpful answer, but hang around and let me explain in more detail. I want to use a simple analogy to analyze how QE works and whether it… Read More

Why Do Corporations Pay Dividends?

There is increasing chatter in recent years about share repurchases, dividends, corporate investment and the ideal way for firms to use capital.  But one question that economists can’t really agree on the answer to is why companies pay dividends at all?  As noted in an excellent Twitter conversation initiated by Matthew Yglesias, even great thinkers… Read More