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Japan Inc.'s vast pool of cash is growing stagnant

If companies don't put their money to work, investors will continue to shy away

A Subaru plant in Japan's Gunma Prefecture: The carmaker wants to maintain a capital ratio of about 50% and lower its ROE to around 16%.

TOKYO Japanese companies have never been in better financial shape. Their sky-high ratio of capital to assets testifies to that fact, with the average figure topping 40% for the first time last fiscal year. There's a catch, however: They are inveterate hoarders, which critics say points to a corporate governance problem.

Saving money itself is not a bad thing, of course. Diligently socking away profits helped Japan Inc. absorb the collapse of the economic bubble at end of the 1980s and the global financial crisis that erupted in 2008. But companies have done a poor job of putting that money back into the economy by funneling it into investment or returning it to shareholders.

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