Caterpillar Inc.s CEO, Jim Owen, noted, Sitting on a big wad of cash doesnt make any sense
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Caterpillar Inc.’s CEO, Jim Owen, noted, “Sitting on a big wad of cash doesn’t make any sense whatsoever for shareholders [because] it tends to promote bad practice among management.
. . . You’ve got more [cash] than you know what to do with, and you think you’re so damned good you can buy anything and make it better” [Brat and Gruley, 2007]. If this view is correct, what does it imply about the efficiency consequences of the corporate tax treatment of dividends versus retained earnings?
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