In this directive, the company decides on a fixed dividend paid to shareholders at regular intervals. The dividend is not eligible, even if the business suffers losses or generates a significant profit. A widely held belief is that ownership of shares in a private or private company in California automatically entitles you to dividends declared by the Board of Directors. In reality, it is very easy for a board of directors to avoid distributing all or most of the dividend profits to an unfriendly shareholder, through salaries and bonuses to employees and executives and the creation of a significant reserve for the group. See our article Who Has Power When Push Comes to Shove in a California Corporation. Courts will rarely replace their judgment with the board of directors when setting appropriate salaries or bonuses for workers. A claim to excessive pay or a constructive dividend can be advanced as described above, but such struggles are skyrocketing for the angry shareholder. Dividend policy focuses on fiscal policy for the payment of a cash dividend in the present or on the payment of a dividend increased at a later date. Whether and how much dividends are paid is determined primarily on the basis of the company`s unted income (cash surplus) and influenced by the company`s long-term profitability. If there is a cash surplus and the company does not need it, management is expected to pay some or all of these excess profits in the form of cash dividends or to repurchase the company`s shares through a share repurchase program. The following categories of dividend policies answer the above question: in principle, the company`s decision to give dividends or not depends on the ability to invest unsusc issued profits, i.e.
a strong relationship between investment decisions and dividend decisions. Walter`s model shows the relevance of the dividend policy and its impact on the value of the stock. Dividends are paid in cash. On the other hand, the result is an accounting measure and does not constitute the true cash flow of a company. Therefore, a more liquidity-oriented way of determining dividend security is to replace the result with free cash flow. Free cash represents the company`s available assets on the basis of its post-investment operating activities: in addition to cash dividends and real estate dividends, a company may temporarily pay a single special dividend.