Cash-rich firms often make questionable acquisitions,rather than pay out the cash to shareholders.This:

Question

Quizplus · Accepted Answer

Cash-rich firms not paying out the cash to shareholders and instead making questionable acquisitions is an example of an agency problem. This is because the management team might have other incentives and objectives that prioritizes their own interests rather than working towards maximizing shareholder wealth.

Cash-Rich Firms Often Make Questionable Acquisitions,rather Than Pay Out the Cash