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The Red Cross is a non-profit. facebook has a legal obligation to maximize shareholder value: Whereas for-profit organizations exist to earn and re-dist

The Red Cross is a non-profit. facebook has a legal obligation to maximize shareholder value: Whereas for-profit organizations exist to earn and re-distribute taxable wealth to employees and shareholders, the nonprofit corporation exists solely to provide programs and services that are of self-benefit.

celoyd 16y ago
No, it has a legal obligation to do what (the majority of) its shareholders say. If they tell it to dance a jig and give all its assets to the Flat Earth Society, it’s obliged. Maximizing shareholder value in the way that’s usually meant is a business school doctrine, not a legal doctrine. (Edit: on second thought, it is a legal doctrine, just not the legal doctrine.) See, for example, http://www.virginialawbusrev.org/VLBR3-1pdfs/Stout.pdf http://www.virginialawbusrev.org/VLBR3-1pdfs/Stout.pdf : “Dodge v. Ford is a mistake, a judicial “sport,” a doctrinal oddity largely irrelevant to corporate law and corporate practice. What is more, courts and legislatures alike treat it as irrelevant. […] Only laypersons and (more disturbingly) many law professors continue to rely on Dodge v. Ford.”
- klochner 16y ago
  If they go public as expected, I'm doubting many equity holders will be interested in a jig. I stand by my observation that a non-profit is poor evidence for the assertion "Money can be a major concern to a huge operation without being its primary focus"
- deleted 16y ago
  [deleted]
tedunangst 16y ago
So it's not legal for a for-profit organization to donate to charity?
- klochner 16y ago
  Of course it's legal, it could be great PR.
  - tedunangst 16y ago
    But the money donated would likely generate better returns if reinvested in the business (or even just regular advertising), so it's not maximizing value. Lots of companies exist to make money, sure, but it's possible for a company to exist where that's not the raison d'etre.
    - robryan 16y ago
      Not really, the goodwill can't be measured but it's likely to generate better returns in the long run.

celoyd 16y ago

No, it has a legal obligation to do what (the majority of) its shareholders say. If they tell it to dance a jig and give all its assets to the Flat Earth Society, it’s obliged. Maximizing shareholder value in the way that’s usually meant is a business school doctrine, not a legal doctrine. (Edit: on second thought, it is a legal doctrine, just not the legal doctrine.) See, for example, http://www.virginialawbusrev.org/VLBR3-1pdfs/Stout.pdf http://www.virginialawbusrev.org/VLBR3-1pdfs/Stout.pdf : “Dodge v. Ford is a mistake, a judicial “sport,” a doctrinal oddity largely irrelevant to corporate law and corporate practice. What is more, courts and legislatures alike treat it as irrelevant. […] Only laypersons and (more disturbingly) many law professors continue to rely on Dodge v. Ford.”

klochner 16y ago
If they go public as expected, I'm doubting many equity holders will be interested in a jig. I stand by my observation that a non-profit is poor evidence for the assertion "Money can be a major concern to a huge operation without being its primary focus"
deleted 16y ago
[deleted]

tedunangst 16y ago

So it's not legal for a for-profit organization to donate to charity?

klochner 16y ago
Of course it's legal, it could be great PR.
- tedunangst 16y ago
  But the money donated would likely generate better returns if reinvested in the business (or even just regular advertising), so it's not maximizing value. Lots of companies exist to make money, sure, but it's possible for a company to exist where that's not the raison d'etre.
  - robryan 16y ago
    Not really, the goodwill can't be measured but it's likely to generate better returns in the long run.