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I was reading the definition of "Bottom Line" on Investopedia and one of the reasons companies increase their bottom-line is to issue payments (dividends) to stockholders as an incentive to maintain ownership

However, I'm a bit confused about why maintaining ownership is a reason for companies paying dividends to shareholders. Particularly because if a stockholder did decide to sell his shares (for whatever reason which could be that there were no dividends/not enough dividends), since its a secondary market, it would just go to another buyer who really wanted those shares. I understand at the start in the primary market a company would want to incentivize buyers to buy their shares, but once we get into the secondary market it's not like the stocks are going to disappear, so it doesn't matter who it goes to as long as someone is holding it. Essentially, a share cannot be sold without a buyer, so regardless of whether ownership is maintained there will always be a new owner to pay for and hold that share.

I know there are other reasons why a dividend's existence is important, but specifically, Investopedia's reasoning on maintaining ownership doesn't make much sense to me/seems irrelevant.

I know I'm wrong, so hopefully, I can figure out soon why... Thank you so much for all your time!

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    $\begingroup$ Initially, I would speculate it is because shareholders are collectively the owners of the company, and they want to maximise rent extraction from the operation. If the existing management do not cooperate to that end, they can be fired and replaced by those who will, or the entire business may be sold for scrap and the capital proceeds invested elsewhere. I agree though that the article is not at all clear about why "maintaining ownership" is important. $\endgroup$
    – Steve
    Commented Jun 25, 2020 at 4:17
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    $\begingroup$ @Steve please post answers as answers. $\endgroup$
    – Giskard
    Commented Jun 25, 2020 at 8:23
  • $\begingroup$ @Giskard, I'm not confident that it is a sufficient answer, but the question (and the linked article) seems to be improperly premised on the idea that shareholders are a little bit like customers who have to be kept happy or else they will totter off elsewhere, rather than owners who collectively have absolute power over the corporation and its management. Saying so out loud may enable others in a more confident position to formulate a quality answer, since I don't know enough about how businesses are financed to know whether there are indeed advantages to maintaining share prices. $\endgroup$
    – Steve
    Commented Jun 25, 2020 at 12:29
  • $\begingroup$ @Steve Being uncertain is fine, the community will just downvote wrong answers :) If you comment-answer, then you make it weird for someone who is certain to post a nearly identical answer, so comment-answering should be avoided. $\endgroup$
    – Giskard
    Commented Jun 25, 2020 at 16:07
  • $\begingroup$ @Steve I also happen to think that your comment/answer is correct. One may also mention that companies sometime issue new shares, the price of which are usually around their current share price, but this seems of secondary importance. (I am also not a corporate finance expert.) $\endgroup$
    – Giskard
    Commented Jun 25, 2020 at 16:08

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As I say in the comments, I would speculate share prices must be maintained because shareholders are collectively the owners of the company, and they want to maximise rent extraction from the operation, including maintaining or improving the resale price of the shares.

If the existing management do not cooperate to that end, they can be fired and replaced by those who will, or the entire business may be sold for scrap and the capital proceeds invested elsewhere.

I agree though that the linked article is not at all clear about why "maintaining ownership" is important.

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