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CORPORATE CARE NOT CANNIBALISM

26th September 2014

By: Martin Creamer

Creamer Media Editor

  

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If firms are overdoing share buy-backs and starving themselves of necessary investment, artificially propped-up share prices will eventually tumble, The Economist outlined this month, while urging investors to ensure that the pay schemes of corporate managers are designed in a way that does not create a perverse incentive to repurchase their own stock. It quotes a Bank of America Merrill Lynch poll, which found that a majority of fund managers now think that corporates are forgetting that shareholder capitalism is about growth and creation and not just dividing the spoils. The say that companies investing too little spare corporate cash and that there must corporate care. Shareholders are urged to give willing companies a licence to invest and to immediately reject corporate cannibalism.

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