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yep-- The economic ethics and models espoused by business schools focus on an economic system where companies are expected to maximise short-term gains regardle

yep-- The economic ethics and models espoused by business schools focus on an economic system where companies are expected to maximise short-term gains regardless of consequences. A focus on profit over everything else. It's a matter of law as well-- heads of companies are legally compelled to prioritize shareholder value.

NeedMoreTea 7y ago
> It's a matter of law as well That is simply not true. It's merely cargo culting the Friedman doctrine. It has no basis in corporate law, and never has. https://en.wikipedia.org/wiki/Friedman_doctrine https://en.wikipedia.org/wiki/Friedman_doctrine
- dinodub 7y ago
  I think you're right that it is a misconception that there is a legal obligation to put shareholder value (profit) first. It seems that it's more of a doctrine. I was wrong to state it as a claim without any backing to my claim. From what I am reading online (I am not a lawyer), it stems from a court case "eBay v. Newmark" "The Delaware court's decision in eBay v. Newmark has been viewed by many commentators as a decisive affirmation of shareholder wealth maximization as the only legally permissible objective of a for‐profit corporation." https://onlinelibrary.wiley.com/doi/pdf/10.1111/basr.12108 https://onlinelibrary.wiley.com/doi/pdf/10.1111/basr.12108 "A 2010 decision, for example, eBay Domestic Holdings Inc. v. Newmark, held that corporate directors are bound by "fiduciary duties and standards" which include "acting to promote the value of the corporation for the benefit of its stockholders."" https://www.nytimes.com/roomfordebate/2015/04/16/what-are-corporations-obligations-to-shareholders/a-duty-to-shareholder-value https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co...
  - NeedMoreTea 7y ago
    That's very disturbing as there seems to be no basis in statute (IANAL either). Course being Wiley I can't read beyond the abstract. The FT has run frequent articles particularly, but not solely, US and UK focused that appear to contradict that, including some quite in depth pieces. Not the most definitive of the many they've run, but from first page of search a US-centred piece from a US author, who's also a US lawyer: But the controlling legal rule is universal and rock-solid: in every US jurisdiction, boards are allowed to use their “business judgment” to pursue ESG (environmental, social, and governance) principles for the purpose of creating long-term corporate value Which is what you'd reasonably expect, as short-term pursuit of shareholder value can be of extreme detriment to the longer term prospects of the company - and therefore shareholders. https://www.ft.com/content/6e806580-d560-11e9-8d46-8def889b4137 https://www.ft.com/content/6e806580-d560-11e9-8d46-8def889b4...

NeedMoreTea 7y ago

> It's a matter of law as well That is simply not true. It's merely cargo culting the Friedman doctrine. It has no basis in corporate law, and never has. https://en.wikipedia.org/wiki/Friedman_doctrine https://en.wikipedia.org/wiki/Friedman_doctrine

dinodub 7y ago
I think you're right that it is a misconception that there is a legal obligation to put shareholder value (profit) first. It seems that it's more of a doctrine. I was wrong to state it as a claim without any backing to my claim. From what I am reading online (I am not a lawyer), it stems from a court case "eBay v. Newmark" "The Delaware court's decision in eBay v. Newmark has been viewed by many commentators as a decisive affirmation of shareholder wealth maximization as the only legally permissible objective of a for‐profit corporation." https://onlinelibrary.wiley.com/doi/pdf/10.1111/basr.12108 https://onlinelibrary.wiley.com/doi/pdf/10.1111/basr.12108 "A 2010 decision, for example, eBay Domestic Holdings Inc. v. Newmark, held that corporate directors are bound by "fiduciary duties and standards" which include "acting to promote the value of the corporation for the benefit of its stockholders."" https://www.nytimes.com/roomfordebate/2015/04/16/what-are-corporations-obligations-to-shareholders/a-duty-to-shareholder-value https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co...
- NeedMoreTea 7y ago
  That's very disturbing as there seems to be no basis in statute (IANAL either). Course being Wiley I can't read beyond the abstract. The FT has run frequent articles particularly, but not solely, US and UK focused that appear to contradict that, including some quite in depth pieces. Not the most definitive of the many they've run, but from first page of search a US-centred piece from a US author, who's also a US lawyer: But the controlling legal rule is universal and rock-solid: in every US jurisdiction, boards are allowed to use their “business judgment” to pursue ESG (environmental, social, and governance) principles for the purpose of creating long-term corporate value Which is what you'd reasonably expect, as short-term pursuit of shareholder value can be of extreme detriment to the longer term prospects of the company - and therefore shareholders. https://www.ft.com/content/6e806580-d560-11e9-8d46-8def889b4137 https://www.ft.com/content/6e806580-d560-11e9-8d46-8def889b4...