>It is literally illegal for them to not do what's going to provide the best return to shareholders.
That is an often repeated misconception. A director has a duty of loyalty and care. As long as any decision is made in entire fairness or approved by an independent director courts historically give a lot of leeway. And rightly so. Firstly because most decisions that increase shareholder value on an arbitrary timescale are undesirable and a lot of decisions that will have a negative impact on shareholder value on an arbitrary timescale might still be very attractive. Secondly, it would paralyze the decision-making process.
Just like dividends- share buyback is- in theory- a value-neutral transaction for shareholders (except some tax benefits) but it is a pretty bad signal to give for a tech company imo (what apple is communicating to shareholders is that they can't find a better way to invest the money that would generate value) and has some inherent risks for the company.
A_PlantPerson t1_j29f9qv wrote
Reply to comment by Yeti-420-69 in [OC] Apple’s cash flow statement visualized by giteam
>It is literally illegal for them to not do what's going to provide the best return to shareholders.
That is an often repeated misconception. A director has a duty of loyalty and care. As long as any decision is made in entire fairness or approved by an independent director courts historically give a lot of leeway. And rightly so. Firstly because most decisions that increase shareholder value on an arbitrary timescale are undesirable and a lot of decisions that will have a negative impact on shareholder value on an arbitrary timescale might still be very attractive. Secondly, it would paralyze the decision-making process.
Just like dividends- share buyback is- in theory- a value-neutral transaction for shareholders (except some tax benefits) but it is a pretty bad signal to give for a tech company imo (what apple is communicating to shareholders is that they can't find a better way to invest the money that would generate value) and has some inherent risks for the company.