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Accounting History Of Capital Maintenance: Legal Precedents For Managerial Autonomy In The United Kingdom, Dean Arden, Maxwell E. Aiken

Accounting Historians Journal

The effectiveness of the capital maintenance concept that became enshrined in British companies legislation during the 19th century was almost immediately undermined when companies were permitted to pay dividends from circulating' capital surpluses, even though overall there were losses of total invested capital. It is generally accepted that the British courts were conscious not to limit management's capacity to innovate and operate their businesses in good faith, and to maximize the capacity of their entities to distribute dividends to shareholders now and in the future. Nevertheless, it is unclear why at the time some accounting methods were accepted as being …