What is the effect on shareholders wealth if the company didn't pay the dividend?

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1226164

2026-05-12 10:56

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Non payment of dividend is to be differentiated from non declaration of dividend. Some companies, even though in profits, prefer to retain the profit in the business than disbursing dividends. This in facts maximises the shareholders wealth, due to the effect of compounding.

Otherwise, if non payment of dividend is due to absence of sufficient profits, then the shareholders wealth diminishes.

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