Item request has been placed! ×
Item request cannot be made. ×
loading  Processing Request

CORPORATE RETAINED EARNINGS AND CYCLICAL FLUCTUATIONS.

Item request has been placed! ×
Item request cannot be made. ×
loading   Processing Request
  • Additional Information
    • Abstract:
      The article focuses on corporate retained earnings and cyclical fluctuations in the economy. Corporate retained earnings, which reached high proportions during twenties but were at a low ebb during thirties, have in recent years again become a significant component of the total savings in the economy. If business remains good and profits substantial in the post-war period, there is reason to believe that the practice of plowing back a considerable part of net earnings will continue. Two approaches have distinguished the study of retained earnings in the last two decades. Students of economic theory have been interested in the subject mainly in connection with the investigation of cyclical fluctuations in the economy. This paper is chiefly concerned with the relation between retention of earnings and cyclical fluctuations. Issues pertaining to corporate finance, however, are also necessarily involved. For the effect of retained earnings on the amplitude of cyclical swings depends upon amounts retained, the type of assets in which they are invested, and the character of charges made against surpluses during depressions. These factors, in turn, are dependent in a large degree upon attitudes of owners and managers of corporate enterprises.