In a previous post, I analyzed what Canadian corporations are doing with their profits. I described how across almost every sector of the economy, corporations are distributing more of their profits to owners than they are investing.

In this brief post, I’m going to describe what Canadian corporations are doing with funds acquired through issuance of debt and equity securities. I will be using StatCan data on corporate issuances of long-term debt and equity. Unfortunately, the data only goes back to 2020.

The StatCan data identifies five uses for funds:

General corporate purposes.

Debt repayment and refinancing.

Working capital.

Exploration, research & development.

Mergers & acquisitions.
The first two uses are operational spending rather than investment. The

Corporate profits have received much more scrutiny in recent years. High inflation provoked on-going debates about the role of profit margins with terms like “greedflation” and “price gouging” levelled at corporations. People recognized that, at minimum, corporations are profiting from inflation. Analysis of 4,550 publicly-listed corporations found that 33% had record operating profits in 2021 or 2022.[1] Further, corporations with pricing power were found to be actively worsening inflation by hiking their profit margins.  

The corporate defence is that they are just passing along higher costs. However, during the Parliamentary testimony of Canada’s grocery CEOs, Loblaw’s then-CEO, and still Chairman, Galen Weston offered a general defence of corporate profits to justify the record