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> Remember, preserving the corporation is not the goal; maximizing value to the shareholders is the goal. Preserving the the company is generally quite importa
by gridlockd 7y ago
> Remember, preserving the corporation is not the goal; maximizing value to the shareholders is the goal.
Preserving the the company is generally quite important in order to maximize value.
The "maximizing value" provision doesn't imply "in the short term", unless for some reason all the value is only in the short term.
If this wasn't the case, no company could ever invest in anything, because that lowers the short-term value.
Of course in practice the short term is often given preference, but that's not because of the provision.
- pfdietz 7y ago> Preserving the the company is generally quite important in order to maximize value. Often it is, but not always. If the market for the company's product is going away it may make sense to just ride things down to the end, milking as much as they can as they die. Monetizing other value in the company may also be possible, of course. The corporation could be purchased, or its parts could be sold in liquidation. The point is that survival of the corporation is not an end in itself, it's only relevant insofar as its maximizes shareholder value.