New York Times (opinion piece)
There is a common belief that corporate directors have a legal duty to maximize corporate profits and “shareholder value” — even if this means skirting ethical rules, damaging the environment or harming employees. But this belief is utterly false. **To quote the U.S. Supreme Court opinion in the recent Hobby Lobby case: “Modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not.”And corporate case law describes directors as fiduciaries who owe duties not only to shareholders but also to the corporate entity itself, and instructs directors to use their powers in “the best interests of the company.”
Serving shareholders’ “best interests” is not the same thing as either maximizing profits, or maximizing shareholder value. “Shareholder value,” for one thing, is a vague objective: No single “shareholder value” can exist, because different shareholders have different values. Some are long-term investors planning to hold stock for years or decades; others are short-term speculators.
No, running coach is right. The corporation’s duty is to maximize shareholder wealth over some period of time, not just this very instant. Now, different corporations will have different timelines, but none is “just this very instant, all the time, goddam it!!!”
John_Mace:
No, running coach is right. The corporation’s duty is to maximize shareholder wealth over some period of time, not just this very instant. Now, different corporations will have different timelines, but none is “just this very instant, all the time, goddam it!!!”
I didn’t use the term instant.
And, rc quoted an opinion piece, not facts.
D_Anconia:
I didn’t use the term instant.
And, rc quoted an opinion piece, not facts.
Which included a quote from the Hobby Lobby case.
That doesn’t mean they’re not required to pursue profits. (For a publically held company.) Hobby Lobby is privately held.
Since you ignored the quote:
I never said they’re not required to pursue profit.
D_Anconia:
I didn’t use the term instant.
And, rc quoted an opinion piece, not facts.
You said he was “completely wrong” when he said the company might be best served by looking out in time rather than doing some simple thing that could raise profits in the very short term.
D_Anconia:
According to whom? You?
This explains it better than I can. You’ll have to use your imagination to see how it affects the entire US economy.
Take the simple example of outsourcing production overseas. Certainly it makes sense for any one company to aggressively pursue such a strategy. But when every company does it, so many American workers wind up losing their jobs or having their pay cut that they can no longer buy even the cheaper goods produced overseas. The companies may also find that government no longer has sufficient tax revenue to educate workers or invest in the roads and ports and airports through which their goods are delivered to market.
D_Anconia:
According to whom? You?
Are you familiar with the consensus of every economist who has ever lived?
Do you know an economist who has recommended that there be no equilibrium that recognizes the interests of all market participants?
It would be helpful if you posted a link that wasn’t behind a paywall. :rolleyes:
Ruken
December 31, 2017, 3:14am
1192
The post wasn’t about publicly traded businesses, which are only like 0.02% of all businesses in the US.
Selected quotes that destroy your arguments:
There are no statutes that put the shareholder at the top of the corporate priority list. … Cornell University law professor Lynn Stout has been looking for years for a corporate charter that even mentions maximizing profits or share price. She hasn’t found one.
Nor does the law require, as many believe, that executives and directors owe a special fiduciary duty to shareholders. The fiduciary duty, in fact, is owed simply to the corporation…
Ruken
December 31, 2017, 3:15am
1194
It’s only paywalled for people who haven’t figured out how to internet.
Strange. I had no problem and I don’t pay a penny to look at WaPo.
Gutenberg.org is your friend. I’ve downloaded machine-readable versions of Wealth of Nations and some other classics just so I can ninja Googlers.
Oh my. If this is your level of economic sense, please ask further questions in the Pit where they can get such response as they deserve.
Lynn Stout couldn’t destroy her way out of a paper bag.
One of her “notable theories” is in regards to “The importance of human conscience to peace, prosperity, and the rule of law”. Sure, lady. Ivory tower nonsense.
I also have trouble reading Washington Post articles. This, despite that I’ve obeyed their earlier instruction to disable my Ad Blocker.
I trust neither of you is suggesting that anyone delete his or her WaPo cookies. :eek: I believe that in the U.S.A. many would consider it illegal for a common citizen to delete cookies presented by Job Creators™ to protect their intellectual property.
But speaking of cookie deletion, is anyone else irked that Google’s Chrome changed its cookie-deletion procedure from ‘unnecessarily cumbersome’ to ‘even more egregiously tedious’? Did they do this to impede anti-Job Creator™ activity by scofflaws like yourselves?
D_Anconia:
Lynn Stout couldn’t destroy her way out of a paper bag.
One of her “notable theories” is in regards to “The importance of human conscience to peace, prosperity, and the rule of law”. Sure, lady. Ivory tower nonsense.
So you can’t actually refute what was quoted?
