Question

what is mean by contractual constraint in dividend decision?
Please explain it as simply as you can!

Answer 1

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Legal, ethical and contractual constraints in the media industry. 1. There are some workers who are notentitled to certain statutory rightsThe Contract of employment is the agreement made between the employerand the employee.

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Answer 2

The contractual constraints that affect the dividend decision are the financial position of the firm, the stock price, liquidity position, legal factors and the borrowing capacity of the firm in the financial markets

Explanation:

• The decision for the dividends of a firm are taken by the important directors and stakeholders of the company. It is an important decision for the enterprise regarding the amount of disbursement of payments to be make to the stakeholders at a certain time
• The contractual constraints in dividend decisions are the financial position of the firm, the liquidity elements,  legal factors  and their access and borrowing capacity in the financial markets. The constraints show the limitation of the firm till certain earnings have been done.
• These limitations on dividends help in protecting creditors from losing money since it depends on the financial status of the firm. There are certain legal and institution elements that are bounded to the dividend decision of the enterprise

To know more about dividend decision

What is meant by dividend decision? State any four factors affecting dividend decision of a firm?

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