Quote:
Originally Posted by MarchHare
What benefit is there for a business to hoard cash? If a corporation is sitting on billions of unspent dollars, wouldn't the shareholders demand it be either distributed in the form of dividends or re-invested in the company to grow the business?
Sorry if these seem like stupid/obvious questions, but it doesn't make sense to me why a business would amass money for its own sake. Individuals want to profit, and businesses want to grow; hoarding cash accomplishes neither.
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Declaring dividends is a pain in the butt, and securing financing is even worse. It's way easier to have $10B in cash sitting around for R&D (or whatever) than to declare it all in dividends then have to go back out to the capital markets when you want to spend.