Islamic Economics Institute

Wednesday Academic Dialogue

Profit, Dividend, and Compensation:
 
Empowering Shareholders

Full Text

Kaleem Alam

 Islamic Economics Institute
 
King Abdulaziz University, Jeddah

Wednesday 04 September, 2013 (28 Shawwal, 1434H)

Abstract

Recent crisis and failure of some major corporation that shook the business world was inspiration for this paper. This paper proposes to link top executives and as well as the employees of the firm to the profit generated by the firm. It proposes to empower the shareholders to approve debts application of the firm and fixing the bottom most salary. Being a shareholder is being the owner of the firm and hence the shareholder must have first claim over the profit, hence the paper recommends mandatory annual distribution of profit’s portion as dividend. The paper produces a chart and tables to further simplify and substantiate the idea.

 

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