[ThatMightBePaul]

Actually, they are NOT entitled to dividends. That's part of the myth, and is covered in the book. You should give it a read. The author covers some historical cases which are often misinterpreted, and lead to the confusion. In the case of dividends entitlement, the case you're drawing from is https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.

She's a lawyer and professor in precisely this area. You could read the wikipedia article, and try to confirm your bias. Or, you can read the book, written by an expert, and broaden your perspective.

[AmericanChopper]

You’re (perhaps intentionally) confusing profits and dividends. Based on the type stock a shareholder owns, they are absolutely entitled to their share of dividends.

The authors point is that a company is not obliged to pay all its profits in devisends. Without any proper explaination, the author draws the conclusion that shareholders aren’t entitled to any of the companies profits. This completely ignores to irrefutable truths

1) Not paying dividends does not automatically mean not maximising shareholders benefit. There’s unlimited ways a company can invest their profits in things other than dividends that will still benefit shareholders.

2) The shareholders control the company’s decision making. They elect the board, and the board controls the entire company.

The authors entire argument relies on pointless semantics and a highly selective view of reality. The same selective view you’ve displayed by acting as if profits and dividends are the same thing, and ignoring corporate governance structures.