Company 's Fiduciary Responsibility Regarding The Distribution Of Profit

1186 Words Aug 3rd, 2016 5 Pages
At least once, we have thought of being shareholders at some corporations where we can make some money out of our investments in this company. Now, in order to make that money the company has to first make profit, and then based on that management will determine how they are going to redirect the gains. This profits will either be kept by the company as retained earnings, so the company can actually expand or do whatever they have conceived in their business plan; the profits will be paid as dividends to its shareholders, which is when we as shareholders make money; or the profits will be split in between dividends and retained earnings. No matter what’s the case, all this decision falls under the scope of management and the company’s business model and goals. In this work we are going to evaluate management’s fiduciary responsibility regarding the distribution of profit to dividends and/or retained earnings as well as we will be presenting scenarios for the cases before mentioned, and the impact of media and ownership by institutional investors for each of the management 's decision options.
In order to better comprehend the topics to be discussed, let us define our first key concept: fiduciary responsibility. According to INC.com, “fiduciary duty is a legal requirement of loyalty and care that applies to any person or organization that has a fiduciary relationship with another person or organization. A fiduciary is a person, committee, or organization that has agreed to…

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