In fact, businesses appear to be using some of their very large holdings of cash for other purposes. Corporations have increased their share repurchases, which hit a record level last year. They have also increased share retirements through cash-financed mergers and acquisitions, which have been boosted by a surge in buyouts.
Evidently, corporate managers view prospective returns from these uses of cash flow as comparing favorably with those from new capital spending projects. The low level of investment has not been unique to the United States.