Reference no: EM133111565

Question - Many U.S. businesses are cash-rich, thanks to strong earnings in recent quarters fueled by the economic recovery. Fundraising rounds during the onset of the coronavirus pandemic and the availability of cheap debt have caused corporate cash holdings to swell. Companies in the S&P 500 held an aggregate of $3.7 trillion in cash and cash equivalents at the end of the second quarter, up from $3.5 trillion a year before, according to S&P Global Market Intelligence, a data provider. Spending on share buybacks increased much faster than capital expenditures in the first half of the year, after pullbacks in both categories last year amid the pandemic, S&P said in response to a Wall Street Journal data request. Share repurchases at companies in the S&P 500 increased to $370.4 billion, up 29% from the first six months of 2020. Capital spending-which usually goes toward assets such as land, buildings, and technology-rose to $337.17 billion, up 4.8% from the year-earlier period. So, what factors do finance chiefs need to consider when deciding how to allocate capital? Why are some people critical of companies undertaking share repurchases? Why do you think a new bill from Senate Democrats calls for a 2% tax on buybacks? How did the pandemic impact capital expenditures, dividends, and share repurchase (i.e., how did chief financial officers manage companies' financing during the Covid 19-related downturn)?