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> keep those profitable quarters Isn't it actually illegal for publicly traded companies to do otherwise?

• giantsloth 8y ago
  No this is actually a myth. “More to the point, corporate directors are protected from most interference when it comes to running their business by a doctrine known as the business judgment rule. It says, in brief, that so long as a board of directors is not tainted by personal conflicts of interest and makes a reasonable effort to stay informed, courts will not second-guess the board’s decisions about what is best for the company — even when those decisions predictably reduce profits or share price.” https://www.nytimes.com/roomfordebate/2015/04/16/what-are-corporations-obligations-to-shareholders/corporations-dont-have-to-maximize-profits https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co...
• Kliment 8y ago
  absolutely not, but the shareholders can stage a rebellion if the company keeps going in a direction they don't want it to. The standard examples here are companies that lose money or make minimal profits due to investing revenue into product development or growth. This is something shareholders are often okay with.
• manigandham 8y ago
  Illegal? No. The principle is "best interests of shareholders" but that has never meant only profits, especially if the costs of those profits do material damage to the world those shareholders live in, in which case it's not in the best interests.