3 ms·

Matt Levine has an worthwhile take on the new "stakeholder" mission statement: """ It is productive—not 100% accurate, but a useful heuristic—to assume that al

Matt Levine has an worthwhile take on the new "stakeholder" mission statement: """ It is productive—not 100% accurate, but a useful heuristic—to assume that all corporate governance debates in the U.S. are about whether shareholders or managers should have more power to control the corporation. There are other stakeholders, sure, but they are mostly tools in the shareholder/manager fight, not power centers in themselves. 6 So when an association of big public-company CEOs gets together and declares that corporations should serve the community, take care of the environment, and be responsible to employees and customers, not just shareholders, that might be because the CEOs have thought it over and decided that employees and the environment are getting a raw deal, but it is also possible that the CEOs have thought it over and decided that shareholders are annoying. """ [1] https://www.bloomberg.com/opinion/articles/2019-08-19/maximize-shareholder-value-top-ceos-might-be-opting-out https://www.bloomberg.com/opinion/articles/2019-08-19/maximi...

dredmorbius 7y ago
Levine's focus on the principle-agent and manifest vs. covert aspects of short-term vs. long-term returns hits on a theme of risk in economic activity that I've been noodling at. In one sense, Levine's argument is for better tools for making, and costing / pricing in risks and rewards of future activities. Or perhaps he's observing that a bird in the hand wins over two, or four, or four hundred, in the bush, no matter what. Given that risk, uncertainty, imperfect, and nonuniformly unveiled and available information are givens in the real world, this is a bit of a stumper for economics. Alternatively, imposing obligatory constraints through other mechanisms -- say, competing and equally-considered stakeholder demands from employees, business partners, government, and community -- might be an alternate approach. Effectively removing some of the near-exclusive power now claimed by shareholders.

dredmorbius 7y ago

Levine's focus on the principle-agent and manifest vs. covert aspects of short-term vs. long-term returns hits on a theme of risk in economic activity that I've been noodling at. In one sense, Levine's argument is for better tools for making, and costing / pricing in risks and rewards of future activities. Or perhaps he's observing that a bird in the hand wins over two, or four, or four hundred, in the bush, no matter what. Given that risk, uncertainty, imperfect, and nonuniformly unveiled and available information are givens in the real world, this is a bit of a stumper for economics. Alternatively, imposing obligatory constraints through other mechanisms -- say, competing and equally-considered stakeholder demands from employees, business partners, government, and community -- might be an alternate approach. Effectively removing some of the near-exclusive power now claimed by shareholders.