What it is:
Capital accumulation occurs when a company acquires assets. Capital accumulation also occurs when an institutional investor or other financial institution acquires a large position in a company over time.
How it works (Example):
Companies can accumulate assets in a variety of ways, and it is important to remember that assets can be physical, intangible or financial. In any case, their job is to produce issue bonds, reinvesting profits, etc.and profits. A company can accumulate by acquiring another company and/or its assets, ,
In the shares of, say, Company XYZ here and there over time until it has a substantial stake in the company.world, an institution might engage in capital accumulation by buying
Why it Matters:
For companies, capital accumulation can signal preparation for growth. For investors, capital accumulation can signal interest in an acquisition or in becoming active in the company's management. For these investors, the accumulation takes place over time so as to do so "quietly" and without driving up the price of the suddenly.