Too much of a good thing?

Steve Rosenbush

Are U.S. corporations piling up too much cash? The companies of the S&P 500 have amassed nearly $800 billion among them. I asked Jeremy Siegel, the finance professor at the University of Pennsylvania's Wharton School, whether that was the case. His answer? Absolutely. “Studies show that firms that accumulate cash do not in general create value for shareholders,” Siegel said. He thinks that the cash amassed by the S&P 500 is way to high at 7% of its total market value. Siegel would like to see companies across the board should give half of it back and that stocks would rise 1 1/2 percentage points as a result.

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