Opinion

Why Pushing Companies to Return Cash to Shareholders Is Good for the Economy

Why Pushing Companies to Return Cash to Shareholders Is Good for the Economy
Models wear creations by Igor Knezevic 3-D printed by Shapeways at the 3D Print Show in Paris on Nov. 15, 2013. Joel Saget/AFP/Getty Images
Peter Morici
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Activist investors and institutional shareholders are increasingly forcing publicly held companies to return more cash to shareholders, and that’s good for the economy.

According to an S&P Capital IQ study, companies in the Standard & Poor’s 500 Index returned about 36 percent of operating cash flow to investors through dividends and share repurchases in 2013, up from 18 percent a decade earlier.

Critics contend that's bad for innovation and growth. Such thinking gets things backward and is counter to the facts.
Peter Morici
Peter Morici
Author
Peter Morici, professor at the Robert H. Smith School of Business at the University of Maryland, is a recognized expert on economic policy and international economics. Previously he served as director of the Office of Economics at the U.S. International Trade Commission. He is the author of 18 books and monographs and has published widely in leading public policy and business journals including the Harvard Business Review and Foreign Policy. Morici has lectured and offered executive programs at more than 100 institutions including Columbia University, the Harvard Business School and Oxford University.
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