2.1 Treasurer Josh Frydenberg has criticized large Australian corporations for returning their cash earnings to shareholders via dividends and share buybacks. He said that instead "corporate Australia must help lift flagging productivity, and hence wages, by investing in their businesses" (AFR, Aug 26, 2019). Evaluate this statement from the point of view of economic theory. How should a firm decide whether to reinvest its earnings or return the profit to shareholders? (7.5 marks)