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Short summary: it appears that courts do not treat corporate shareholders as the ultimate authority of a corporation, deferring to the authority of the Director
by CWuestefeld 17y ago
Short summary: it appears that courts do not treat corporate shareholders as the ultimate authority of a corporation, deferring to the authority of the Directors. The OP wonders why, then, the Directors behave as if they do answer to the shareholders.
This is interesting, I think, because the question of fiduciary responsibility comes up here on HN from time to time.
It seems to me that the author is starting out with the assumption that corporations are evil, or at best amoral. If one drops this assumption, the explanation is easy: even without courts forcing them to do so, corporate Directors tend to want to do what's best for their shareholders.
- Tycho 17y agoAlso the only consequence of ignoring shareholder wishes mentioned was that occasionally a court battle ensues to oust the director - surely the aftermath involves more than just that.
- duncanj 17y agoI think it's a pseudo-explanation for why someone doesn't live up to his public morality. "Honestly, I really wanted not to close this plant, but we have a responsibility to our shareholders." Sometimes even that play fails, such as when shareholders actually wanted Stanley to stay in Connecticut, but management wanted more profit. In that case, they disobeyed the shareholders for their own supposed fiduciary own good.