What is Capital Accumulation?

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 Does Capital Accumulation Work?

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 revenue and profits. A company can accumulate capital by acquiring another company and/or its assets, issue shares, issue bonds, reinvesting profits, etc.

In the investing world, an institution might engage in capital accumulation by buying shares of, say, Company XYZ here and there over time until it has a substantial stake in the company.

Why Does Capital Accumulation Matter?

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 shares suddenly.

Ask an Expert about Capital Accumulation

All of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Capital Accumulation.

Be the first to ask a question

If you have a question about Capital Accumulation, then please ask Paul.

Ask a question
Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.

Verified Content You Can Trust
verified   Certified Expertsverified   5,000+ Research Pagesverified   5+ Million Users