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I think you're missing my point. The reason for (1) is the idea that "maximizing shareholder value" is the only goal of a corporation. There are two other stake

by hliyan 7y ago

I think you're missing my point. The reason for (1) is the idea that "maximizing shareholder value" is the only goal of a corporation. There are two other stakeholders in a corporation who get shortchanged because of this principle. Of course, suppliers are there, but consider that we are their customers (we being the corporation under consideration). Also note that this is what I follow personally and it's based on fifteen years of experience working for many companies. I would hardly call that arbitrary, and certainly not arbitrary in quotation marks. Whether that's right for an entire industry, is an open question.

sonnyblarney 7y ago
I did see your point, I'm trying to get you to consider what those '3 parties' actually are, and that there are actually other participants as you would like to define it. "There are two other stakeholders in a corporation who get shortchanged because of this principle." There is at least one other obvious group: suppliers. There is a buyer/supplier relationship equilibrium on both sides not just one side - is my point. For example, if you 'contract' for a company, well - you're not an 'employee, shareholder or customer'. But you are 'part of that equation' as a supplier, as important as customers. The other major party that's missing is the lender - this is very much like the 'investor relationship' and so they can't be left out. Remember that financiers who provide debt to a company have senior rights to assets, above and beyond the investors. They can also have special covenants that give them incredibly control. Those financiers can even be individuals (i.e. many 'bondholders' are individuals). They are not investors. So you talk about 'investors getting the advantage' ... that's actually not quite true - many cases it's not the investors, it's the lenders/bond holders who are making bank. Lastly are the externalities. While a company has 'responsibility' towards it's employees and customers, it absolutely has a relationship with every entity that it doe any kind of business with - and those parties matter. The 'economy' is basically a big web of those entities: buyers, suppliers, investors, lenders, workers, externalized entities (+government +NGOs).

by hliyan 7y ago

sonnyblarney 7y ago

I did see your point, I'm trying to get you to consider what those '3 parties' actually are, and that there are actually other participants as you would like to define it. "There are two other stakeholders in a corporation who get shortchanged because of this principle." There is at least one other obvious group: suppliers. There is a buyer/supplier relationship equilibrium on both sides not just one side - is my point. For example, if you 'contract' for a company, well - you're not an 'employee, shareholder or customer'. But you are 'part of that equation' as a supplier, as important as customers. The other major party that's missing is the lender - this is very much like the 'investor relationship' and so they can't be left out. Remember that financiers who provide debt to a company have senior rights to assets, above and beyond the investors. They can also have special covenants that give them incredibly control. Those financiers can even be individuals (i.e. many 'bondholders' are individuals). They are not investors. So you talk about 'investors getting the advantage' ... that's actually not quite true - many cases it's not the investors, it's the lenders/bond holders who are making bank. Lastly are the externalities. While a company has 'responsibility' towards it's employees and customers, it absolutely has a relationship with every entity that it doe any kind of business with - and those parties matter. The 'economy' is basically a big web of those entities: buyers, suppliers, investors, lenders, workers, externalized entities (+government +NGOs).