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As your CEO, I state: " I will never declare a dividend! I will use cash...

As your CEO, I state: " I will never declare a dividend! I will use cash flows to acquire firms. This way you gain and own a large firm."

COMMENT. KEEP IT SHORT!

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Answer #1

A very famous company Apple does not give any dividends to it's shareholders and whatever it earns is ploughed back into the company to make the company earn more profits. If the company does well the stock price increases which improves the gain of the shareholders if they decide to sell.

Acquiring more firms will help the CEO only if the deals are accretive to the stock price instead of dilutive which can only happen if significant synergies exist between the two firms merging.

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