I was reading up on disinvestment on Wikipedia the other day and saw the following passage:
"Some hold that divestment campaigns are based on a fundamental misunderstanding of how stock markets work. John Silber, former president of Boston University, observed that while boycotting a company’s products would actually affect their business, "once a stock issue has been made, the corporation doesn’t care whether you sell it, burn it, or anything else, because they’ve already got all the money they’re ever going to get from that stock. So they don’t care.
Regarding the more specific case of South Africa, John Silber recalled:
“…when the students were protesting the South African situation, I met with them, and they said BU must divest in General Motors and IBM. And I said, “Why should we do that? Is it immoral to own that stock?” Absolutely immoral to own it. And I said, “So then, we’re supposed to sell it to somebody? We can’t divest unless we sell it to somebody. And if we burn the stock, that just helps General Motors, because it reduces the amount of stock outstanding, so that can’t be right. If we sell it to somebody we have just gotten rid of our guilt in order to impose guilt on somebody else.””
However, I recall hearing that some orgs have in fact disinvested from Israel. I presume that these investments are primarily in the form of stocks. How did they actually disinvest?
If you own stock in a company, you get a share of that company’s profits, if they make them. Receiving a share of profits made in something you consider unethical is, indeed, unethical itself.
It also affects their share price if enough people do it, look at the stock price for GME to see what a relatively small number of investors can do to a share price. This becomes a big problem for their other investors, who will demand changes to restore the value of their investment.
It also means they can’t raise funds by creating more shares, as the value is so low.
You missed the part that I was actually asking about.
What is “it”? How do you disinvest properly? By selling the stock?
Yes, by selling any stocks, shares, bonds, whatever.
But wouldn’t the criticism from the article apply then? If the hatred is strong enough, no one is buying that crap anyways.
If nobody wants to buy their stock, that means existing holders won’t be able to sell it, which they would be very pissed off about. And since they literally own the company, the company is obliged to listen to them. The other option is to become an activist shareholder, and use your voting rights in that stock, if you have it, to push for change.
Okay. I think I’m starting to get it then.