The "marginal principle of retained earnings" holds that corporate investment should provide a return equal to or higher than that a shareholder could earn elsewhere.

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The marginal principle of retained earnings states that the return on corporate investment should be equal to or greater than the return a shareholder could earn by investing elsewhere. This principle is used to guide businesses in deciding whether to reinvest earnings or distribute them to shareholders as dividends.

The "Marginal Principle of Retained Earnings" Holds That Corporate Investment