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There are two scenario's that come to mind. The straightforward explanation is that the firm is a charitable organization, and the investors by stock in view of the beneficial effect the firm has on thier community. The second explanation is that the economic activity of the aforementioned firm is beneficial to the investor. For example, small business owners in a certain town might be willing to invest in a ski-mountain, golf resort, amusement park etc. moving in thier town even if it were not directly profitable, if it would attract tourists and increase the demand for thier own goods and services.
There are two scenario's that come to mind. The straightforward explanation is that the firm is a charitable organization, and the investors by stock in view of the beneficial effect the firm has on thier community. The second explanation is that the economic activity of the aforementioned firm is beneficial to the investor. For example, small business owners in a certain town might be willing to invest in a ski-mountain, golf resort, amusement park etc. moving in thier town even if it were not directly profitable, if it would attract tourists and increase the demand for thier own goods and services.
-Chris J
-Chris J
::Well, that wasn't all that hypothetical an example. Many stocks pay no dividends. For example, that described Digital Equipment Corporation for at least three decades; it was no charity; and investors were willing to pay quite a lot of money for Digital shares. [[User:Dpbsmith|Dpbsmith]] 21:05, 16 February 2007 (EST)