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That old myth: http://www.latimes.com/business/hiltzik/la-fi-warren-shareholder-myth-20180816-story.html http://www.latimes.com/business/hiltzik/la-fi-warren-s

That old myth: http://www.latimes.com/business/hiltzik/la-fi-warren-shareholder-myth-20180816-story.html http://www.latimes.com/business/hiltzik/la-fi-warren-shareho...

slededit 8y ago
Not the best article - if it’s a myth why does Senator Warren need to introduce new legislation?
- neltnerb 8y ago
  Because it looks good, and companies need some pressure to adopt new practices that go against their institutional assumptions, even if the new practices are better. Not sure if I agree with her about employee votes or community votes or thresholds, but they're interesting ideas to think about. Obviously it's not getting passed anytime soon, so I read it as a starting point for a conversation. I think both make logical sense, thinking of it as required unionization and an adjustment to require companies that have more power than towns take those towns into account somehow. Definitely an approach to think about. Occasionally, industries will ask as a group to be regulated because it's too hard or risky to take a step on their own, even if they all agree it's a good idea. Salt would be an example where the big companies all generally agree they can easily reduce it without anyone noticing if they all do it at the same time, but if only one does it they'll taste noticeably worse. So the only way they can figure to start reducing salt is by getting a regulation written to make it happen. It's a curious system.
  - slededit 8y ago
    I’m actually interested in proof it is a myth - but this article is not it. It’s an ad for Senator Warrens re-election campaign
- sokoloff 8y ago
  Because she intends to run for President in 2020 and is interested in making a very public grand gesture that will fail to pass in the legislature.
Godel_unicode 8y ago
You might want to consider slightly newer precedents: https://onlinelibrary.wiley.com/doi/pdf/10.1111/basr.12108 https://onlinelibrary.wiley.com/doi/pdf/10.1111/basr.12108
- detaro 8y ago
  That reads more like "you can not too aggressively work against one of your shareholders' influence", not "you have to maximize profits at all costs", and the article claims Craigslist could have mostly preserved it's non-profit-oriented culture through means not challenged by the court. To me, the article more supports than denies the stance of "it's a myth that companies can't improve their workers situation because that would breach their responsibility to shareholders". The responsibility to shareholders exist, but it's not as absolute as argued. Some quotes: > First, the business judgment rule provides broad protection for managers and directors when they make decisions that benefit customers, employees, suppliers, the community, and other non-shareholder interests, as long as these actions are reasonably believed in good faith to promise some shareholder benefit. Enabling corporate social responsibility is not the purpose of the business judgment rule; it is, rather, to avoid the courts’ second-guessing of reasonable decisions by officers and directors. However, it serves, albeit unintentionally, to enable corporations to act responsibly without risking legal challenges from shareholders. > In any event, the elements of the plan that were struck down by the Delaware court were aimed at question- able objectives, which need not have been attained to preserve the Craigslist culture and way of doing business, at least in the short run.

That old myth: http://www.latimes.com/business/hiltzik/la-fi-warren-shareholder-myth-20180816-story.html http://www.latimes.com/business/hiltzik/la-fi-warren-shareho...

slededit 8y ago

Not the best article - if it’s a myth why does Senator Warren need to introduce new legislation?

neltnerb 8y ago
Because it looks good, and companies need some pressure to adopt new practices that go against their institutional assumptions, even if the new practices are better. Not sure if I agree with her about employee votes or community votes or thresholds, but they're interesting ideas to think about. Obviously it's not getting passed anytime soon, so I read it as a starting point for a conversation. I think both make logical sense, thinking of it as required unionization and an adjustment to require companies that have more power than towns take those towns into account somehow. Definitely an approach to think about. Occasionally, industries will ask as a group to be regulated because it's too hard or risky to take a step on their own, even if they all agree it's a good idea. Salt would be an example where the big companies all generally agree they can easily reduce it without anyone noticing if they all do it at the same time, but if only one does it they'll taste noticeably worse. So the only way they can figure to start reducing salt is by getting a regulation written to make it happen. It's a curious system.
- slededit 8y ago
  I’m actually interested in proof it is a myth - but this article is not it. It’s an ad for Senator Warrens re-election campaign
sokoloff 8y ago
Because she intends to run for President in 2020 and is interested in making a very public grand gesture that will fail to pass in the legislature.

Godel_unicode 8y ago

You might want to consider slightly newer precedents: https://onlinelibrary.wiley.com/doi/pdf/10.1111/basr.12108 https://onlinelibrary.wiley.com/doi/pdf/10.1111/basr.12108

detaro 8y ago
That reads more like "you can not too aggressively work against one of your shareholders' influence", not "you have to maximize profits at all costs", and the article claims Craigslist could have mostly preserved it's non-profit-oriented culture through means not challenged by the court. To me, the article more supports than denies the stance of "it's a myth that companies can't improve their workers situation because that would breach their responsibility to shareholders". The responsibility to shareholders exist, but it's not as absolute as argued. Some quotes: > First, the business judgment rule provides broad protection for managers and directors when they make decisions that benefit customers, employees, suppliers, the community, and other non-shareholder interests, as long as these actions are reasonably believed in good faith to promise some shareholder benefit. Enabling corporate social responsibility is not the purpose of the business judgment rule; it is, rather, to avoid the courts’ second-guessing of reasonable decisions by officers and directors. However, it serves, albeit unintentionally, to enable corporations to act responsibly without risking legal challenges from shareholders. > In any event, the elements of the plan that were struck down by the Delaware court were aimed at question- able objectives, which need not have been attained to preserve the Craigslist culture and way of doing business, at least in the short run.