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I don't really see the difference between having a legal obligation to act in your shareholders best interests and an obligation to maximize profits. Given that
by jdoliner 9y ago
I don't really see the difference between having a legal obligation to act in your shareholders best interests and an obligation to maximize profits. Given that profit is most shareholders only interest in owning the stock. Now that does mean that companies should maximize long term profit, perhaps at the cost of short term profit. But I fail to see how paying taxes you don't have to is ever in the best interests of their shareholders.
- FireBeyond 9y agoFairly simply, many investors see corporate longevity, while paying smaller, more reliable dividends as their best interest. Doing so could easily be orthogonal to "maximizing profits".
- jdoliner 9y agoCorporate longevity is only in their interests because it maximizes long term profits.
- namelost 9y agoShareholders care about more than profits. Just ask one! Many shareholders care about stability, There is the whole distinction between "growth" stocks and "income" stocks. Some investors prefer low-growth companies that pay big dividends, other investors prefer just the opposite. Some investors care about environmental issues, or social issues, or religious issues. e.g. the Norwegian sovereign wealth fund divests from companies that don't meet its ethical objectives, and is often a significant investor.
- ceejayoz 9y ago> I don't really see the difference between having a legal obligation to act in your shareholders best interests and an obligation to maximize profits. Simple. "It's in our shareholders' best interest to have a stable society with upwards mobility so more people can buy our products over time." Or, "It's in our shareholders' best interest for us not to act so amorally as to turn public opinion against us, incurring new onerous regulations as a result."