alleryStart learning →In common law countries, how have courts treated company dividend policy?
AThey set the payout rate
BThey refused to intervene
CThey fixed payment dates
DThey banned stock dividends
Answer & Solution
Correct answer: B. They refused to intervene
Courts gave directors wide discretion and typically refused to intervene in dividend policy.
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Related questions
Which limits can restrict how much a firm may distribute as dividend?Why might management avoid changing dividend policy abruptly?Which alternative to cash dividends may a firm choose when surplus cash exists?Which type of shareholder usually prefers earnings to be retained?With no NPV-positive projects and surplus cash, what should management do?Management knowing more than the market is called what?If dividends bear higher tax than gains, raising them does what to value?Per the Modigliani-Miller theorem, dividend policy has what effect on firm value?