China Growth Stocks

[ratobranco]

<<<I totally agree with your post with this one exception. If they reinvest in the company, their value in the company may go up but they cannot buy a car or house with the increase... They would have to sell part of their stock. Paying dividends would be a liquid way to take some earnings out of the company to use for other things (and they would still own 97% of the co.)... and, the share price would very likely increase also, as you point out...>>>

I don't disagree that they benefit from the dividend. My point is simply that they aren't going to institute a dividend policy at the expense of the company's growth. I'm sure they don't mind additional income, but they have no reason to seek it out if it is going to jeapordize the company's well-being, and so the fear of greedy insider padding their pockets at the expense of the rest of us is misguided.

If they wanted cash, and they knew that paying a dividend would hinder the company's growth, they would simply issue themselves more compensatory shares. That way, you pay the cost instead of the company. But they aren't doing that.