Value is conserved, or unchanged, when a company shifts the ownership of claims to its cash flows, but doesn't change the total available cash flows (such as when substituting debt for equity or issuing debt to repurchase shares). Similarly, changing the appearance of the cash flows without actually changing the cash flows, say by changing accounting techniques, doesn't change the value of a company.1 Although this principle may seem obvious, we make it explicit because executives, investors, and pundits often fall for the allure of the elusive free lunch, hoping, for example, that one
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