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The law obliges management of a publicly traded company to report fairly to its shareholders its assets, liabilities, revenues, costs, and certain other items s
by tlholaday 8y ago
The law obliges management of a publicly traded company to report fairly to its shareholders its assets, liabilities, revenues, costs, and certain other items such as the compensation of the five most highly compensated officers.
If a shareholder believes that management is not maximizing profits, the shareholder is at liberty to take his or her money and go elsewhere, by selling his or her shares.
- rosser 8y agoIf that shareholder elects instead to sue, they will almost certainly lose, absent specific evidence of bad faith or of breaches of the duties of care or loyalty, for example. The "business judgement rule" [0] compels courts to defer to the judgement of the executives of a business, on the basis that they have a bona fide interest in that business and its activities, and understand them better than either the court or J. Random Shareholder ever could. "The business judgment rule is very difficult to overcome and courts will not interfere with directors unless it is clear that they are guilty of fraud or misappropriation of the corporate funds, etc." [1] [0] https://en.wikipedia.org/wiki/Business_judgment_rule https://en.wikipedia.org/wiki/Business_judgment_rule [1] ibid.