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Isn't that a board's fiduciary duty to their stockholders? To put it differently would you buy stock in a board that doesn't act this way, would a mutual fund?

Isn't that a board's fiduciary duty to their stockholders? To put it differently would you buy stock in a board that doesn't act this way, would a mutual fund? Which way do you expect the mutual fund's proxies to vote when electing the board? Multi-polar coordination (competition markets) have a lot of bad Nash-equilibrium states, but they are better than any command market in history.

mitchty 9y ago
No, it is not a boards fiduciary duty to maximize profits at the expense of all else for stockholders. This is a myth. There is no legal basis for this claim. https://hbr.org/2010/04/the-myth-of-shareholder-capitalism https://hbr.org/2010/04/the-myth-of-shareholder-capitalism So to take your differently put question, would I buy stock in a company that doesn't act this way? Hell yes I would. It means they're likely adults and not just looking out purely for the bottom line. Which tends to lead to bad results.
- GCU-Empiricist 9y ago
  >https://hbr.org/2010/04/the-myth-of-shareholder-capitalism https://hbr.org/2010/04/the-myth-of-shareholder-capitalism Thanks; Intresting. A look at what the duties are might be this: http://www.oecd.org/daf/ca/corporategovernanceprinciples/1872746.pdf http://www.oecd.org/daf/ca/corporategovernanceprinciples/187...
checkyoursudo 9y ago
No, not fiduciary duty. One theoretical approach to corporate governance/management, but it's not a legal duty. A competing theory is guaranteeing the long-term health of the company instead of short-term profits (current shareholder value). Another is being a good corporate citizen in society. These are usually all at least in a bit of tension. The reason shareholder value is often (almost always?) pushed at any large company is because it so often aligns with the boards' and managers' short-term goals, i.e., make lots and lots of money while the making is good. For a long time, and perhaps even still, Amazon has been held up as an example of a company that is not especially driven by the theory of maximizing shareholder value.
anigbrowl 9y ago
To put it differently would you buy stock in a board that doesn't act this way, would a mutual fund? YES. I don't want to maximize profit, I want sustainable profits and minimal externalities. The economic logic that says all considerations can be reduced to a single metric of utility are extremely suspect (per results from behavioral economics, in both humans and animal species), and also rest on a false utilitarian conceit of perfect foresight that leads its adherents to wildly overestimate the quality of their own judgement (which is one factor in the failure of command economies).
Frondo 9y ago
I will support in any business that ascribes to the 3 Ps: people, planet, profit, in that order. If a business maximizes its dividend payouts by stiffing its workers (i.e. potentially my neighbors, friends, family), it's a shitty business and I want it to go away. If a business maximizes its payouts by wrecking the planet (i.e. my future kids' playground), it's a shitty business and I want it to go away. BUT, after a business looks out for its people and the planet, I want it to make as much money as possible. Anything else, what kind of shitty life is that to live, or legacy to leave behind?

mitchty 9y ago

No, it is not a boards fiduciary duty to maximize profits at the expense of all else for stockholders. This is a myth. There is no legal basis for this claim. https://hbr.org/2010/04/the-myth-of-shareholder-capitalism https://hbr.org/2010/04/the-myth-of-shareholder-capitalism So to take your differently put question, would I buy stock in a company that doesn't act this way? Hell yes I would. It means they're likely adults and not just looking out purely for the bottom line. Which tends to lead to bad results.

GCU-Empiricist 9y ago
>https://hbr.org/2010/04/the-myth-of-shareholder-capitalism https://hbr.org/2010/04/the-myth-of-shareholder-capitalism Thanks; Intresting. A look at what the duties are might be this: http://www.oecd.org/daf/ca/corporategovernanceprinciples/1872746.pdf http://www.oecd.org/daf/ca/corporategovernanceprinciples/187...

checkyoursudo 9y ago

No, not fiduciary duty. One theoretical approach to corporate governance/management, but it's not a legal duty. A competing theory is guaranteeing the long-term health of the company instead of short-term profits (current shareholder value). Another is being a good corporate citizen in society. These are usually all at least in a bit of tension. The reason shareholder value is often (almost always?) pushed at any large company is because it so often aligns with the boards' and managers' short-term goals, i.e., make lots and lots of money while the making is good. For a long time, and perhaps even still, Amazon has been held up as an example of a company that is not especially driven by the theory of maximizing shareholder value.

anigbrowl 9y ago

To put it differently would you buy stock in a board that doesn't act this way, would a mutual fund? YES. I don't want to maximize profit, I want sustainable profits and minimal externalities. The economic logic that says all considerations can be reduced to a single metric of utility are extremely suspect (per results from behavioral economics, in both humans and animal species), and also rest on a false utilitarian conceit of perfect foresight that leads its adherents to wildly overestimate the quality of their own judgement (which is one factor in the failure of command economies).

Frondo 9y ago

I will support in any business that ascribes to the 3 Ps: people, planet, profit, in that order. If a business maximizes its dividend payouts by stiffing its workers (i.e. potentially my neighbors, friends, family), it's a shitty business and I want it to go away. If a business maximizes its payouts by wrecking the planet (i.e. my future kids' playground), it's a shitty business and I want it to go away. BUT, after a business looks out for its people and the planet, I want it to make as much money as possible. Anything else, what kind of shitty life is that to live, or legacy to leave behind?