Harris Corporation has $250 million in cash, and 100 million shares outstanding.
Suppose the corporate tax rate is 35%, and investors pay no taxes on dividends, capital gains, or interest income. Investors had expected Harris to pay out the $250 million through a share repurchase.
Suppose instead that Harris announces it will permanently retain the cash, and use the interest on the cash to pay a regular dividend.
If there are no other benefits of retaining the cash, how will Harris' stock price change upon this announcement?