New ask Hacker News story: Why do governments favor bailout of companies rather than issuing new shares?
Why do governments favor bailout of companies rather than issuing new shares?
2 by DamienSF | 1 comments on Hacker News.
Isn't the public market supposed to offer public companies a way to recapitalize whenever they need it? In recent years public companies have been spending huge amounts of cash buying back their own shares. Wouldn't a functioning economy/financial system promote the issuance of new shares as the main mechanism to raise cash? It's obvious why public companies would prefer a bailout than issuing new shares but why government acting in the interest of its constituents would be so prompt to bail out public companies rather than having them raise cash through the public market? At the minimum wouldn't it be sound to condition a bailout amount to a fraction of cash raised through the market? Is there a way to explain this other than incompetence or corruption?
2 by DamienSF | 1 comments on Hacker News.
Isn't the public market supposed to offer public companies a way to recapitalize whenever they need it? In recent years public companies have been spending huge amounts of cash buying back their own shares. Wouldn't a functioning economy/financial system promote the issuance of new shares as the main mechanism to raise cash? It's obvious why public companies would prefer a bailout than issuing new shares but why government acting in the interest of its constituents would be so prompt to bail out public companies rather than having them raise cash through the public market? At the minimum wouldn't it be sound to condition a bailout amount to a fraction of cash raised through the market? Is there a way to explain this other than incompetence or corruption?
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