Wikipedia:Reference desk/Archives/Humanities/2018 December 23

= December 23 =

Do companies that own themselves exist?
If you created a successful company, for which you hired a capable CEO and board of directors, and just for the fun of it, maybe because you'd have 5 more companies, sold all your shares to the company itself for $1, after which the company would own itself, what would happen?

Do companies that are not owned by anyone exist? Joepnl (talk) 02:47, 23 December 2018 (UTC)
 * I assume your hypothetical shares are examples of the concept of Treasury stock, the legality of which appears to vary from jurisdiction to jurisdiction. I too have wondered what happens if the company buys up all the stock, so I'm looking forward to answers.  PS, you'll note that the article appears to address some of this, although it's totally unsourced.  (I first encountered the concept in the simplified stock market of Railroad Tycoon, in which buying a majority of outstanding stock for the treasury was the only foolproof way of preventing a hostile takeover; the treasury stock article says that treasury stock doesn't have voting rights, which makes sense, so presumably in real life a company can't purely own itself, since it would have all voting rights.)  Nyttend (talk) 03:58, 23 December 2018 (UTC)


 * Is stock required in the creation of a company? ←Baseball Bugs What's up, Doc? carrots→ 04:28, 23 December 2018 (UTC)
 * See the intro to Stock. The stock (also capital stock) of a corporation is all of the shares into which ownership of the corporation is divided.  But if you're creating a partnership, this isn't necessarily true, and of course a sole proprietorship need not have stock, since it's not necessarily going to have a legal existence in the first place.  Nyttend (talk) 04:52, 23 December 2018 (UTC)


 * Ouroboros. --  Jack of Oz   [pleasantries]  20:15, 23 December 2018 (UTC)


 * From Treasury stock: A company cannot own itself... and Total treasury stock can not exceed the maximum proportion of total capitalization specified by law in the relevant country, which I take to mean that it’s illegal for the company to buy back all its stock. Loraof (talk) 20:33, 23 December 2018 (UTC)
 * The problem being, as I noted above, that there's no sourcing whatsoever, and such a general statement particularly cannot be trusted except as a carefully performed summary of the investments laws of many countries. Nyttend (talk) 22:32, 23 December 2018 (UTC)
 * Presumaby, when the OP says "company" he means "corporation". But does that article say anywhere that corporations are required to have stock? ←Baseball Bugs What's up, Doc? carrots→ 01:18, 24 December 2018 (UTC)


 * In Europe we have a frequently used construction called Stiftung, with some similarities to (Foundation (nonprofit)) which in some cases own companies completely or almost (sample: Bertelsmann Stiftung) without being owned themselves or more precisely that can not be sold in shares or parts. These are often also used to avoid taxes and save guard personal wealth. --Kharon (talk) 10:35, 24 December 2018 (UTC)

In 1982 Bendix launched a hostile takeover bid of Martin Marietta, successfully buying the majority of Martin Marietta shares and thus owning the company. Martin Marietta's management used the short time between ownership and control to launch its own hostile takeover of Bendix, successfully buying the majority of Bendix shares and thus owning the company. So for a short period of time the two companies owned each other. Soon after that United Technologies jumped in on Martin Marietta's side and Allied Corporation jumped in on Bendix's side. Basically, Allied Corporation offered enough per share that Martin Marietta sold its Bendix stock with an agreement that the hostile takeover of Martin Marietta would be abandoned. Bendix ended up being acquired by Allied in 1983, and Martin Marietta continued on until 1995 when it merged with Lockheed Corporation to form Lockheed Martin. --Guy Macon (talk) 16:57, 24 December 2018 (UTC)
 * How many employees lost their jobs in the midst of those shenanigans? ←Baseball Bugs What's up, Doc? carrots→ 22:19, 24 December 2018 (UTC)
 * The average is estimated by D. Denis (.) at 17 per cent: employment effects of takeovers ( pdf download ). I suppose data is related to the so-called 1980s takeover boom in the United States. --Askedonty (talk) 23:14, 24 December 2018 (UTC)
 * There is an undetermined number of other facets to the toy however. In articles related to hostile takeovers: in 1995 in the Harvard Business Review you could read: "any one of thousands of employees can plunge an entire corporation into a crisis through either misdeed or oversight". An earlier analysis (1987) was targetting the unions: "the unions typically raise labor costs by about 15 percent" (NATIONAL BUREAU OF ECONOMIC RESEARCH, BREACH OF TRUST IN HOSTILE TAKEOVERS) --Askedonty (talk) 12:43, 25 December 2018 (UTC)

The Daily Telegraph of 22 December discusses the pros and cons of share buybacks. Highlighted advantages include:
 * While share buybacks may be an alternative to within-firm investment, at a whole-economy level they simply amount to a reallocation of funds to better uses.
 * ... share prices rise after buybacks because investors perceive that funds that might have been badly invested are now being released. 2A00:23C2:2400:9600:719E:9A9B:3890:85E5 (talk) 16:38, 28 December 2018 (UTC)