Which group is granted the authority to declare dividends in a corporation?

The board of directors is the group that holds the authority to declare dividends in a corporation. This responsibility is rooted in corporate governance, where the board acts on behalf of the shareholders to make strategic decisions regarding the company’s financial operations.

When a corporation profits, the board evaluates the financial health of the company, future investment needs, and legal considerations before deciding whether to distribute profits to shareholders in the form of dividends. This decision can depend on various factors, including cash flow, earnings, and the overall economic environment.

While shareholders do have influence, particularly through their voting power, they cannot unilaterally declare dividends. Corporate officers and managers typically handle daily operations and implement the board's directives but do not have the authority to declare dividends themselves. Thus, the board of directors plays a critical role in ensuring that the interests of shareholders are represented while also maintaining the financial stability of the corporation.