2 ms·

The firm certainly does exist independently, e.g. see Salomon v A Salomon & Co Ltd https://en.m.wikipedia.org/wiki/Salomon_v_A_Salomon_%26_Co_Ltd https://en.m.

The firm certainly does exist independently, e.g. see Salomon v A Salomon & Co Ltd https://en.m.wikipedia.org/wiki/Salomon_v_A_Salomon_%26_Co_Ltd https://en.m.wikipedia.org/wiki/Salomon_v_A_Salomon_%26_Co_L...

sonnyblarney 8y ago
It's not a matter of legality, it's a matter of pragmatism. Shareholders own and run the company. A majority of shareholders can effectively do anything they want with it, it's theirs. That a corporation may possibly exist independently is a corner case. It doesn't matter, the logic of the article is twisted. It implies that profits can be used by the board of directors for whatever reason, obviously. But that board is elected by shareholders to carry out their bidding, and they are a proxy of shareholders, thereby abnegating the logic of the argument. "The business judgment rule ensures that, contrary to popular belief, the managers of public companies have no enforceable legal duty to maximize shareholder value" My god man, the board will act in the best interest of the shareholders or ultimately they'll get the boot. If the shareholders are dispersed and can't coordinate themselves, they'll have less power and see more go to the next entity with power, probably the executives.
- cjalmeida 8y ago
  > If the shareholders are dispersed and can't coordinate themselves, they'll have less power and see more go to the next entity with power, probably the executives. Change shareholders to voters, executives to elected official, then you have a time tested example of power grab. Checks and balances are important in both cases.
  - sonnyblarney 8y ago
    The ratio is rather different, and that makes a difference. In many companies, merely a handful of entities can make up most of the power, or nearly most of it. Shareholders that matter can usually fit in a room, and have a conversation. With 300 000 to 1 as we see in politics ... it's a little different.

sonnyblarney 8y ago

It's not a matter of legality, it's a matter of pragmatism. Shareholders own and run the company. A majority of shareholders can effectively do anything they want with it, it's theirs. That a corporation may possibly exist independently is a corner case. It doesn't matter, the logic of the article is twisted. It implies that profits can be used by the board of directors for whatever reason, obviously. But that board is elected by shareholders to carry out their bidding, and they are a proxy of shareholders, thereby abnegating the logic of the argument. "The business judgment rule ensures that, contrary to popular belief, the managers of public companies have no enforceable legal duty to maximize shareholder value" My god man, the board will act in the best interest of the shareholders or ultimately they'll get the boot. If the shareholders are dispersed and can't coordinate themselves, they'll have less power and see more go to the next entity with power, probably the executives.

cjalmeida 8y ago
> If the shareholders are dispersed and can't coordinate themselves, they'll have less power and see more go to the next entity with power, probably the executives. Change shareholders to voters, executives to elected official, then you have a time tested example of power grab. Checks and balances are important in both cases.
- sonnyblarney 8y ago
  The ratio is rather different, and that makes a difference. In many companies, merely a handful of entities can make up most of the power, or nearly most of it. Shareholders that matter can usually fit in a room, and have a conversation. With 300 000 to 1 as we see in politics ... it's a little different.