Explain Why the Global Financial Crisis Has Resulted in the Number

question 27

Essay

Explain why the global financial crisis has resulted in the number of potential and actual legal liability insurance claims and explain how auditors can deal with the risk of litigation in tough economic times.

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Definitions:

Future Dividends

Expected payments made by a corporation to its shareholder members based on future earnings, typically projected by the company’s management or analysts.

Target Payout Ratio

A goal set by a company to distribute a certain percentage of earnings to its shareholders in the form of dividends.

Dividend Payments

Dividend payments refer to the distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.

Signaling Effect

A theory in finance that suggests when a company announces an increase or decrease in dividends, it signals its financial health and prospects to investors.