Pros And Cons Of Hoarding
When the average person think of the word hoarding, they think of a house filled with trash, newspapers, and canned foods or of a yard filled with junk and/or animals. What the average person does not automatically think of are corporations stockpiling their cash. Corporate cash hoarding is real and it is a common practice of some of the top corporations in the United States. As the focus shifts to corporate hoarding, the images shift in the mind of the average person as well. Images such as, CEOs stashing cash under their mattresses, offshore bank vaults filled with millions of dollars or a barge carrying gold bars on its way to a foreign country.
According to Bud Meyers, in his article entitled, “Cash Hoarding Becomes an Addiction”, hoarding …show more content…
If the firm had the benefit to borrow quickly, this wouldn’t be necessary (Sanchez & Yurdagul, 2013). However, some of them have so much money that they do not know what to do with it. In fact, Corporate America is sitting on so much cash that they could buy the New York Yankees 466 times without borrowing any additional funding. Yet, we are a country with great need and our wealth is increasingly inequitably distributed. The United States of America is a country where the majority of the wealth is owned by one percent of the population, while the remaining portion of the population shares a very small amount of the overall income of the United States. There is a growing income inequality gap that has not been seen since the Gilded Age (Blumenthal, 2014).
As per Vipal Monga, in her article entitled, “Record Cash Hoard Concentrated Among a few Companies”, while much of their money is hoarded, large companies utilize the U.S. banking system to acquire additional cash and cash equivalents (Monga, 2015). So you ask, why are companies who have money borrowing money from banks and investors to maintain their operations? The answer is simple, because the interest rates are low, companies would rather use the money of institutions and other investors than to use their own
According to Bud Meyers, in his article entitled, “Cash Hoarding Becomes an Addiction”, hoarding …show more content…
If the firm had the benefit to borrow quickly, this wouldn’t be necessary (Sanchez & Yurdagul, 2013). However, some of them have so much money that they do not know what to do with it. In fact, Corporate America is sitting on so much cash that they could buy the New York Yankees 466 times without borrowing any additional funding. Yet, we are a country with great need and our wealth is increasingly inequitably distributed. The United States of America is a country where the majority of the wealth is owned by one percent of the population, while the remaining portion of the population shares a very small amount of the overall income of the United States. There is a growing income inequality gap that has not been seen since the Gilded Age (Blumenthal, 2014).
As per Vipal Monga, in her article entitled, “Record Cash Hoard Concentrated Among a few Companies”, while much of their money is hoarded, large companies utilize the U.S. banking system to acquire additional cash and cash equivalents (Monga, 2015). So you ask, why are companies who have money borrowing money from banks and investors to maintain their operations? The answer is simple, because the interest rates are low, companies would rather use the money of institutions and other investors than to use their own