Dividend Payment Process In Public And Private Companies.edited

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Dividend Payment Process in Public and Private Companies

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Dividend Payment Process in Public and Private Companies

The corporate wages that companies give their stakeholders are referred to as dividends.

They can be in property form or stock shares, or the form of cash. The company's financial

strength in its present and future performance is seen in its ability to pay dividends. The

payment process for private companies is simpler than that of public companies since private

companies have fewer shareholders than public companies who may have people all over in

different countries. The constant public observation and scrutiny is not present in private

companies, especially SME's. The private business owners have full control over their earnings

and dividend policies. Therefore, they can examine and predict their dividend patterns and how

to allocate money to their various shareholders.

Most public companies are huge and highly successful companies that accumulate large

amounts of cash over a short period. For example, some of these companies, Amazon, have

high amounts of liquid assets in a single company that reduces the return to stakeholders on

equity. Amazon has made billions of dollars without paying any dividend to its shareholders

over the years, creating controversial conversations. The number of restrictions for private

companies is not as much as those of public institutions. However, the dividend payments also

depend on the dividend policies put in place by the company directors (Reyna, 2017). These

policies include stability, where dividend payments is guaranteed and predictable regardless of

the company's earnings—secondly, the constant policy where the percentage of earnings

determines dividends during that period. Finally, a residual policy where the company pays the

remaining amount after all company expenses are taken care of. These policies help maintain

discipline in the financial sector and should be put in the company laws to avoid future

contradictions.

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1 Dividend Payment Process in Public and Private Companies Student’s Name Institutional Affiliation Course Details Professor’s Name Due Date 2 Dividend Payment Process in Public and Private Companies The corporate wages that companies give their stakeholders are referred to as dividends. They can be in property form or stock shares, or the form of cash. The company's financial strength in its present and future performance is seen in its ability to pay dividends. The payment process for private companies is simpler than that of public companies since private companies have fewer shareholders than public companies who may have people all over in different countries. The constant public observation and scrutiny is not present in private companies, especially SME's. The private business owners have full control over their earnings and dividend policies. Therefore, they can examine and predict their dividend patterns and how to allocate money to their various shareholders. Most public companies are huge and highly successful companies that accumulate large amounts of cash over a short period. For example, some of these companies, Amazon, have high amounts of liquid assets in a s ...
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Tags: financial fraud dividend policy ownership structure public and private companies Dividend Payment Process