Long story there. It's an artifact of bankruptcy and tax law.
A company exists to pay dividends, and its value is the present value of all future dividends. That's the classic view, and it was the normal pattern for companies until the 1970s or so.
Two things changed. One, bankruptcy became less painful. "Secured creditors" became a more general concept. This meant that banks and bondholders moved up in priority, at the expense of unpaid vendors, customers with deposits, and others who never wanted to lend money in the first place. This paved the way for Michael Milken and the junk bond industry.
Second, interest and principal payments on debt are not taxed, while dividends are. This makes debt more attractive than equity as a means of obtaining capital. A high-interest loan with the strong possibility of bankruptcy is effectively an equity investment but is taxed as a debt.
This combination has warped capital markets out of shape. It's why there's "private equity", which is essentially a leveraged buyout. It's what powered the financialization of everything.
All things being equal, a company that doesn't pay a dividend, made $10B last year and $11B this year is worth more than it was a year ago because it could pay a dividend, or it could sell, or it could liquidate. There are ways to get money, even if the shares have no buyers.
Or another way, if AAPL went to $0 and I bought up all the shares, it still prints money, and I could tell the board I want a dividend. It has some amount of intrinsic value in extreme situations. If I own all of some cryptocurrency (and maybe I do!), there's no way to extract value without finding a sucker to sell to.
A company exists to pay dividends, and its value is the present value of all future dividends. That's the classic view, and it was the normal pattern for companies until the 1970s or so.
Two things changed. One, bankruptcy became less painful. "Secured creditors" became a more general concept. This meant that banks and bondholders moved up in priority, at the expense of unpaid vendors, customers with deposits, and others who never wanted to lend money in the first place. This paved the way for Michael Milken and the junk bond industry.
Second, interest and principal payments on debt are not taxed, while dividends are. This makes debt more attractive than equity as a means of obtaining capital. A high-interest loan with the strong possibility of bankruptcy is effectively an equity investment but is taxed as a debt.
This combination has warped capital markets out of shape. It's why there's "private equity", which is essentially a leveraged buyout. It's what powered the financialization of everything.