How does it make sense to hire externally rather than promote internally?

Feel free to redirect me to another subreddit or to a previous post answering this question.

I've heard many examples of companies refusing to give a high performing employee a substantial raise to retain them in their current role and instead opting to have the candidate leave and then hiring an external candidate for the role at that exact desired salary. How does this make financial sense?

Would there not be a greater cost in having to recruit, train, and evaluate the new employee as a fit to the organization?

I can understand someone not being a fit for a new or bigger role after a promotion but is it not a greater risk to hire an external candidate that has limited knowledge of the inner working of a given thinking organization?