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You made the claim that corporations must act ethically or its securities fraud. That claim is not correct. Some unethical behavior can indeed be illegal but

You made the claim that corporations must act ethically or its securities fraud. That claim is not correct. Some unethical behavior can indeed be illegal but unethical in itself doesn’t automatically break the law. As for information, management of the corporation works for the shareholders. If the shareholders don’t like management decisions,they can replace management. So, ultimately the corporation is an entity designed to advance the interests of shareholders.

joshuamorton 7y ago
> You made the claim that corporations must act ethically or its securities fraud. That claim is not correct. Some unethical behavior can indeed be illegal but unethical in itself doesn’t automatically break the law. Not exactly no, I made the claim that a lot of unethical, but not directly illegal, behavior has been successfully called securities fraud. > So, ultimately the corporation is an entity designed to advance the interests of shareholders. Which is not the same as "generating returns for shareholders". Of course this also gets even more confusing with voting/non-voting shares, where for the majority of shareholders, your interests don't matter at all.
- vasilipupkin 7y ago
  We can dance around semantics, the point is corporations cannot do things that shareholders collectively find as bad for them. For example, corporations cannot benefit employees at the expense of shareholders. If management decided to write a big fat check to employees and shareholders didn’t agree, they can call an emergency meeting cancel the check, fire management and appoint new management.
  - vonmoltke 7y ago
    > they can call an emergency meeting cancel the check No, they can't. If management took an action that is within their power to take it cannot be reversed at shareholder whim. They can certainly throw out the current management and install new management who will attempt to reverse what the old management did, but what is done is done.

joshuamorton 7y ago

> You made the claim that corporations must act ethically or its securities fraud. That claim is not correct. Some unethical behavior can indeed be illegal but unethical in itself doesn’t automatically break the law. Not exactly no, I made the claim that a lot of unethical, but not directly illegal, behavior has been successfully called securities fraud. > So, ultimately the corporation is an entity designed to advance the interests of shareholders. Which is not the same as "generating returns for shareholders". Of course this also gets even more confusing with voting/non-voting shares, where for the majority of shareholders, your interests don't matter at all.

vasilipupkin 7y ago
We can dance around semantics, the point is corporations cannot do things that shareholders collectively find as bad for them. For example, corporations cannot benefit employees at the expense of shareholders. If management decided to write a big fat check to employees and shareholders didn’t agree, they can call an emergency meeting cancel the check, fire management and appoint new management.
- vonmoltke 7y ago
  > they can call an emergency meeting cancel the check No, they can't. If management took an action that is within their power to take it cannot be reversed at shareholder whim. They can certainly throw out the current management and install new management who will attempt to reverse what the old management did, but what is done is done.