Resolved Question

Why might shareholders allow the business to keep all of the profit for its own use ?

Best Answer - Chosen by Asker

Ploughing or putting money back into the business could mean a bigger profit share in the future.

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Other Answers (2)

• Typically, only for (future) Growth ...
  
  Shareholders (as a rule) choose to invest in Companies that either pay good dividends OR have high prospects of paying good future dividends ...
  
  In the first case, if a high dividend payer cuts their dividend (or the share holders have reason to believe the divi will be cut), their share price will collapse (the share-holders will switch their capital to a rival company that continues to pay high dividends).
  
  In the second case, share holders will only keep investing if the share price continues to rise whilst the profits are being put into growth .. since more investors = higher share price, such companies are totally dependent on investor confidence .. the minute confidence wavers, the share price collapses (eg. "dot.com boom / bust")
• 1) for working capital 2) To build up its reserves 3) To declare bonus issue to shareholders. 4) To build up a strong Balance Sheet.