John,
As I see it, we have two areas of misunderstanding.
First, most of your assumptions about my position on value are mis-stated, although it is understandable, from a different starting point, how you came to those assumptions.
Secondly, I have not yet convinced you that value can differ from one entity to another, only FOR AN EXTREMELY LIMITED SPECIAL CASE. Save this one for later.
Repeating my scenario :
Imaginary Scenario #123456789
Assume that you own n shares in a company. It is Friday afternoon, and you are about to take a month's vacation out of any contact into wildest Alaska. You know only two things about the company's actions to be taken while you are out of contact.
1. On the following Monday, the company will either grant 100 shares to an employee or grant cash.
2. By the end of the Friday before you return from vacation, the company will have the same number of outstanding shares as it had when you left.
What is the simplest rule which accurately describes the lasting impact on the company of the unseen actions taken by the company when you were out of contact?
The simplest answer is that the company will either have given up a cash grant or it will have given up the cash required to actually buy back the stock sometime during the month. This is just a description of reality, not involving accounting in any way.
No matter what the market price of the stock did during the month, at the end of the month what matters to the company is
what price it paid. This is true whether the company bought the stock back from the employee or bought an equivalent number of shares from the market. The impact on the employee might be the reverse of the impact on the company, but there is no reason that it has to be, and there is no reason to assume whether or not the employee still has his stock at the end of the month.
Please try to find a reason why this is not true, why all of the possibilities of things that could have happened during the month and still met the starting and ending conditions don't all reduce to the question of how much cash the company expended to assess the company impact. IGNORE ACCOUNTING!
TIA, Don |
