Kevin Carmichael: On the question of CEWS and dividends, investors will ultimately decide

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“They blew it,” said Cheryl Kim, a Toronto-based consultant who advises corporate leaders on reputation issues. “You saw a bunch of leaders who were not willing to make a hard decision and say, `You know what? That money was given to us to help keep our company functioning well.’ The fact they gave it to their shareholders, to me, is an absolute abdication of leadership from the CEO, CFO and the board.”

The owners probably don’t see it that way.

There are valid reasons why companies don’t cut dividends, even in current times

Preetika Joshi, an assistant professor of accounting at McGill University in Montreal

It’s easy from the lower rungs of the social ladder to accuse them all of greed, but there is also plenty of academic literature that supports paying dividends, at least if you define your job as protecting a corporation’s share price. The corporate research catalogue is also heavy with evidence that dividends correlate with stock prices.

If you were running an oil company this year, a dividend might be one of the few things propping up your company’s value. If that’s the case, maybe the moral obligation is to do all you can to avoid wiping out your shareholders.

“There are valid reasons why companies don’t cut dividends, even in current times,” said Preetika Joshi, an assistant professor of accounting at McGill University in Montreal. Still, she admits that it’s no longer clear that running a publicly traded corporation is as straightforward as that.

Joshi’s research focuses on international tax dodging, and she said it’s clear investors reward companies that find legal ways to lower their tax bills, even if those methods test a standard definition of ethical behaviour. At the same time, the demand for shares in companies that can demonstrate commitments to environmental, social, and governance (ESG) concerns is growing rapidly. The sustainable investing market was worth almost US$40 trillion at the start of 2018, a 34 per increase from 2016, according to the Global Sustainable Investment Alliance.