When a company needs capital, for instance to fund adding a new facility, they have two options of issuing common stock or utilizing retained earnings. There are many costs involved, I was going to say financial and otherwise but in the end they all come down to financial in the end. One of the largest considerations would be is does the company want to give up even more ownership of the company. By issuing new common stock they are selling part ownership of their company where as using retained earnings may reduce the financial stability, the funds to cover outstanding debts and such, it maintains the same percentage of ownership as prior to the capital investment. Then the current owners will not have to share in any additional profits resulting from that investment; they will be able to reinvest the profit to cover the retained earnings that were utilized and then save, spend on other projects or pay out to owners however if they had sold stock the profit made from such project would be shared with the additional new owners as well.

How else would this decision impact a company? Can you provide actual financial examples?