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Once, there was a company called Mingzhe Group, which caused an uproar in the business world.
Their economic behavior can be described as amazing, like the three of them "secretly crossing Chen Cang" and extracting huge wealth from the company.
In one year, the company not only earned 179 million yuan, but also paid 380 million yuan in dividends!
Let's start with an economic phenomenon and dissect this amazing story. We might as well call it "ATM economics".
It describes how some companies or entrepreneurs use their businesses as ATMs through various means, constantly withdrawing cash instead of reinvesting money into business development.
This phenomenon is often accompanied by characteristics such as high dividends, lack of capital investment, lack of innovation, and negligence of employees and the business.
In the case of Mingzhe Group, they have become prominent representatives with a dividend amount of up to 380 million.
This dividend amount far exceeds the company's annual earnings and is actually realized through capital market financing and borrowing.
While this practice enables quick cash withdrawals, it poses a significant risk to the company's financial health and future growth.
At the same time, Mingzhe Group's capital investment is relatively limited. They don't spend enough money on R&D, market expansion or new projects, but instead spend most of their money on high dividends.
This practice can cause the company to lose its competitiveness in the future due to the lack of innovation and strategic investment.
In addition to this, ATM economics manifests itself as negligence on employees and business.
Companies may reduce the training and development of their employees and reduce the quality of their products or services in order to free up more funds for dividends.
This can damage the company's reputation, lower employee morale, and ultimately lead to the decline of the business.
So why do some companies adopt the ATM economics approach instead of actively investing and growing their businesses?
This has to do with the corporate governance structure, management's incentives, and short-term profit pressures.
Some executives may pursue short-term financial success for high rewards and incentives, ignoring long-term business sustainability.
In addition, some shareholders may also be more interested in high dividends than in the long-term value of the company.
So, the question is: how do you balance short-term dividends with long-term business development?
This question may seem unrelated to ATM economics, but it is actually about corporate governance, incentives, and financial strategies.
One possible solution is to establish stricter corporate governance mechanisms to ensure that executive and shareholder incentives are aligned with the long-term interests of the company.
In addition, companies can consider developing a smart financial strategy that combines dividends with capital investment to achieve a balance between the short and long term.
Overall, ATM economics is a worrying phenomenon that could pose a threat to the long-term health and sustainability of companies.
The case of Mingzhe Group reminds us that excessive pursuit of short-term dividends can lead to the decline of long-term business.
Therefore, companies and investors need to carefully consider how to find a balance between the short and long term to ensure the sustainability and healthy development of economic activity.
Finally, will the rise of digital currencies change companies' financial strategies and dividend models?
This issue involves the development of the digital economy and the transformation of the monetary system, which will have a profound impact on the future economic landscape.
What do you have to say about this? Feel free to leave your thoughts in the comment section!