Touted as a bulwark against recession, it could draw down quickly—and it is concentrated at a few big companies.
U.S. corporate books are awash in cash, which some say should insulate them in an economic downturn—and potentially keep their stock prices higher when others are tanking. Cash “is incredibly useful when it comes to weathering uncertainty—something the global economy has experienced a lot of recently,” notes a recent study from the Kellogg School of Management at Northwestern University.
Nonetheless, the voluminous cash caches may be transitory. The biggest cash holdings are concentrated at major companies, and many others still have poor cash positions. As a result, cash stashes have declined recently as less well-heeled businesses draw them down. Beyond that, a prolonged recession could diminish even the fattest cash accounts.
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