Asked by Austin Parker on May 31, 2024
Verified
Companies generally don't have to pay dividends, but if they have always done so in the past and stockholders invested because of that history, a legal case can be made to force payment even if earnings are depressed.
Legal Case
A dispute between opposing parties resolved in a court of law.
Pay Dividends
The act of distributing a portion of a company's profits to its shareholders at intervals, typically quarterly or annually.
Stockholders
Individuals or entities that own shares in a corporation, giving them certain rights such as voting on corporate matters.
- Acquire knowledge about the responsibilities of the board of directors in determining dividend policies and the jurisdictional statutes that oversee dividend distribution.
Verified Answer
ZK
Zybrea KnightJun 03, 2024
Final Answer :
False
Explanation :
Dividends are typically at the discretion of a company's board of directors and there is no legal obligation to pay them, even if the company has a history of doing so. Shareholders cannot legally force a company to pay dividends.
Learning Objectives
- Acquire knowledge about the responsibilities of the board of directors in determining dividend policies and the jurisdictional statutes that oversee dividend distribution.
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