Originally published on December.08,2019

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Jang-Sup Shin, The Subversion of Shareholder Democracy and

the Rise of Hedge-Fund Activism



“It has now become a “new normal” that many of America’s largest corporations routinely distribute more than 100 percent of net income to shareholders, generating the extra cash by reducing cash reserves, selling off assets, taking on debt, or laying off employees. For instance, the 459 companies in the S&P 500 Index in January 2016 that were publicly listed over the ten-year period 2006-2015 expended $3.9 trillion on stock buybacks, representing 53.6 percent of net income, plus another 36.7 percent of net income on dividends. Much of the remaining 9.7 percent of profits was held abroad, sheltered from U.S. taxes”.

Net Equity Issues By Decade

Net equity issues, 2015 $billions Net equity issues as % of GDP 1946-1955 143.2 0.56 1956-1965 110.9 0.30 1966-1975 316.0 0.58 1976-1985 -290.9 -0.40 1986-1995 -1,002.5 -1.00 1996-2005 -1,524.4 -1.09 2006-2015 -4,466.6 -2.65

Source: Lazonick and Shin https://www.ineteconomics.org/uploads/papers/WP_58-Lazonick-Functions-Fallacies.pdf

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