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Unformatted text preview: siness. The company has
no right to transfer those risks to the community by not complying with the decree.
Further, technically, the company was always liable for employee retirement costs, but it ignored that
liability by adopting a liberal accounting policy of a payasyougo basis. It is only fair that Bloomington,
Indiana want to ensure that the company pays for the hazardous waste cleanup, irrespective of the games
that the company can play with the accounting numbers. ID12–7
a. An investor can make a return through 1) capital appreciation (the stock moving up in value), 2) receipt of
cash dividends from the company, or 3) both capital appreciation and dividends. b. Companies that pay dividends are not necessarily under the same pressure to improve earnings and cash
flow as companies who opt not to pay dividends. Investors who are confident they can rely on a steady
stream of dividends are less likely to pressure management to take steps to continually boost future cash
flows to drive the stock price e...
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