What would happen if a companies profits just stayed the same over a period of quarters? I obviously don’t understand it at all but isn’t it just unsustainable to expect growth indefinitely?
In: Economics
A company’s board of directors is chosen by the people who own the company (the shareholders). People who own company stock want it to go up in value and (if applicable) pay out dividends (profits).
If you are a shareholder who wants shares to go up in value as much as possible and pay as high a dividend as possible, and the current management of the company is not doing that, the shareholders will appoint a CEO who will do that.
As far as infinite growth, it’s usually not seen like that. It’s just about what will happen THIS year (or THIS quarter). This is why video game companies who have just had record earnings will lay off a huge chunk of employees. Not because they need to save money due to a loss, but because it makes their earnings numbers look better today (even if it may slow growth next quarter).
Latest Answers