Another reason is stock market cushion. Notice how stocks go up when companies lay people off. So instead of accumulating profits for a rainy day, which would j

Another reason is stock market cushion. Notice how stocks go up when companies lay people off. So instead of accumulating profits for a rainy day, which would just be taken for buy backs and dividends, they store away "reserves" in the form of people that they can cut. A bit like a hot air balloon ballast. Even privately held companies can find the ballast useful. By inflating the employment numbers, they can simultaneously seem like a big company as well as one that promises huge efficiency gains for those buying it and willing to trim the fat. The larger the organization, the more it can handle excess ballast. These are the ones who can often get rid of small competitors by buying them or by getting regulatory capture to get rid of them. That's part of the regulatory bit -- get politicians to craft regulations that only a large bureaucracy can fill and that is an immediate impediment to small-time competitors regardless of any other start-up costs.