Home > Open Market > Tax-avoiding Dotcoms playing Russian Roulette with their Stock Price

Tax-avoiding Dotcoms playing Russian Roulette with their Stock Price


I am watching “We’re not broke”, the documentary around US Unset and tax-avoidance by large corporations. Now the story behind all this is not new. Through history corporations have tried multiple times to put the chief financial officer in charge of generating better corporate results. A business executive would focus on understanding their customers better, giving them what they ask and selling them more. A technical executive on creating a blue ocean strategy through some technical innovation that puts the company in the centre of a new universe and makes competitors irrelevant. A financial executive however has only numbers to play with. Last time the CFOs cooked the books with aggressive revenue recognition. This time they are focusing on artificially lowering the tax bill via the creation of offshore shell companies that get all the profit even if they don’t have any employees.

A Russian Roulette Game with Stock Prices
A large corporation like GE or Bank of America is relatively safe from large groups of customers not being happy with the company’s corporate social irresponsibility [CSI]. What are people going to do? Change banks? Buy a fridge elsewhere? It is just not going to happen in big enough numbers to be of any impact on their profits.

Dotcoms however have a weakness that can put their stock price at risk if they want to be the king of CSI: people might actually do what they want them to do. Most of the big dotcoms get most money from advertisement. They put ads everywhere and teach people how to click them. Advertisers then pay per clicked ad lots of money to these dotcoms. However what if people in protest would massively start clicking advertisement banners but not buying the actual things behind them. The dotcoms would initially see their profits go through the roof but all its customers would see that they pay lots more money and get no value at all. Pretty soon stock prices would go in free fall. The irony would be that these protectors could use social networks and online videos to teach others how to join in the protest. So one advise to large dotcoms, please pay a responsible amount of taxes and focus your effort on out-innovating the rest of the industries and not on copying their bad habits…

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