Wisdom of Continuing the Business should be Considered

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The question, viz., that of retaining the stockholders's capital in the business, involves considerations that are basically identical. Managements are naturally loath to return any part of the capital to its owners, eventhough this capital may be far more useful - and therefore valuable - outside of the business than in it. Returning a portion of the capital (eg., excess cash holdings) means curtailing the resources of the enterprise, perhaps creating financial problems later on and certainly reducing somewhat the prestige of the officers.

Complete liquidation means the loss of the job itself. It is scarcely to be expected, therefore, that the paid officers will considered the questions of continuing or winding up the business from the standpoint solely of what is the best interests of the owners. We must emphasize again that the directors are often so closely allied with the officers - who are themselves members of the board - that they too cannot be counted upon to consider such problems purely from the stockholders' point of view.

Thus it appears that the question whether or not a business should be continued is one that at times may deserve indepedent thought by its proprietors ~ the stockholders.

(It should be pointed out also that this is, by its formal or legal nature, an ownership problem and not a managemet problem.)
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