Jurisdiction-specific corporate laws limit directors' freedom to declare dividends.Without these limits, directors might dissipate the firm's assets for the benefit of

Question

Quizplus · Accepted Answer

Jurisdiction-specific corporate laws limit directors' freedom to declare dividends to prevent them from dissipating the firm's assets for the benefit of common shareholders and harming other non-shareholding stakeholders, such as creditors, employees, and suppliers. Thus, choice A is the best option that explains the rationale behind these limits. Choices B to E are not relevant in this context, as they do not explain the reason for restricting directors' power to declare dividends.

Jurisdiction-Specific Corporate Laws Limit Directors' Freedom to Declare Dividends