Cash and Investments: Corporate Savings Glut in USA
Profits/Retained Earnings of a firm can be used in number of ways:
- Capital Investments
- Debt Repayment
- Dividends
- Cash and Short Term Investments
- Long Term Investments
- Share Buybacks
- M&A Investments
Please see three quarterly reports from FACTSET on trends in
- Dividents
- Buybacks
- Cash and Investments
Share buybacks are very common for several years.
Please see my related posts
Why do Firms buyback their Shares? Causes and Consequences.
Low Interest Rates and Business Investments : Update August 2017
Short term Thinking in Investment Decisions of Businesses and Financial Markets
Mergers and Acquisitions – Long Term Trends and Waves
Business Investments and Low Interest Rates
From The Corporate Saving Glut in the Aftermath of the Global Financial Crisis
From Why Are Corporations Holding So Much Cash?
From FACTSET Cash and Investment Quarterly
Companies are holding on to the large sum of cash. Rather than capital investments (CAPEX), cash is being used for share buybacks, dividend payouts, mergers and acquisitions, and cash investments (short and long term).
From FACTSET Cash and Investment Quarterly
Key Sources of Research:
The Corporate Saving Glut in the Aftermath of the Global Financial Crisis
Joseph W. Gruber
Steven B. Kamin
This Draft: June 2015
https://www.imf.org/external/np/seminars/eng/2015/secularstag/pdf/Gruber.pdf
The global corporate saving glut: Long-term evidence
Peter Chen, Loukas Karabarbounis, Brent Neiman
05 April 2017
http://voxeu.org/article/global-corporate-saving-glut
Declining Labor Shares and the Global Rise of Corporate Saving
Loukas Karabarbounis
Brent Neiman
October 2012
http://faculty.chicagobooth.edu/brent.neiman/research/labshare.pdf
The Global Rise of Corporate Saving
Peter Chen
Loukas Karabarbounis
Brent Neiman
March 2017
http://faculty.chicagobooth.edu/brent.neiman/research/CKN.pdf
http://www.nber.org/papers/w23133.pdf
FACTSET Dividend Quarterly
https://www.factset.com/websitefiles/PDFs/dividend
FACTSET Buyback Quarterly
https://www.factset.com/websitefiles/PDFs/buyback
FACTSET Cash and Investment Quarterly
https://www.factset.com/websitefiles/PDFs/cashinvestment
Why Are Corporations Holding So Much Cash?
By Juan M. Sanchez and Emircan Yurdagul
2013
https://www.stlouisfed.org/~/media/Files/PDFs/publications/pub_assets/pdf/re/2013/a/RE_Jan_2013.pdf
Why Do Companies Hold Cash?
Gianni La Cava and Callan Windsor
RDP 2016-03
https://www.rba.gov.au/publications/rdp/2016/pdf/rdp2016-03.pdf
MULTINATIONALS AND THE HIGH CASH HOLDINGS PUZZLE
Lee Pinkowitz
René M. Stulz Rohan Williamson
June 2012
http://www.nber.org/papers/w18120.pdf?new_window=1
The Determinants and Implications of Corporate Cash Holdings
Tim Opler, Lee Pinkowitz, Rene Stulz, Rohan Williamson
Issued in October 1997
http://www.nber.org/papers/w6234.pdf
WHY DO U.S. FIRMS HOLD SO MUCH MORE CASH THAN THEY USED TO?
Thomas W. Bates Kathleen M. Kahle Rene M. Stulz
September 2006
http://www.nber.org/papers/w12534.pdf
Why do firms hold so much cash? A tax-based explanation
C. Fritz Foley, Jay C. Hartzell, Sheridan Titman, and Garry Twite
October 2006
http://www.nber.org/papers/w12649.pdf
It’s Alive! Corporate Cash and Business Investment
Finn Poschmann
https://www.cdhowe.org/sites/default/files/attachments/research_papers/mixed/e-brief_181.pdf
Dead money
There are good reasons for hoarding cash.
John Lorinc
http://www.canadianbusiness.com/economy/dead-money/
IS “DEAD” MONEY ALIVE? A FIRM-LEVEL ANALYSIS OF CANADIAN NON-FINANCIAL LISTED CORPORATIONS CASH HOLDING AND CAPITAL EXPENDITURE BEHAVIOR
2014
IMF
https://www.imf.org/external/pubs/ft/scr/2014/cr1428.pdf
