The decision to pay or not pay dividends is made by the Board of Directors. These people are voted on by the shareholders. The whole process is similar to the political process. Shareholders vote for those they feel will best represent the needs of the shareholders. There are several types of stock, but the two that are most prevalent are common stock and preferred stock.
Common stock is differentiated from preferred in a couple of ways.
First, preferred stock will pay a stated dividend. This must normally be paid to preferred stock holders before any dividends can be paid to common stock holders. The other difference is that preferred shareholders are higher on the food chain, sort of speak. Let me explain. If a company goes bankrupt, there is an order in which the assets of the company are dispersed.