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>In the US, public companies "have an obligation to their shareholders to be profitable", and China is a gigantic market. This simply isn't true and I wish peo

>In the US, public companies "have an obligation to their shareholders to be profitable", and China is a gigantic market. This simply isn't true and I wish people would stop repeating it. https://www.lawschool.cornell.edu/academics/clarke_business_law_institute/corporations-and-society/Common-Misunderstandings-About-Corporations.cfm https://www.lawschool.cornell.edu/academics/clarke_business_... > "modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not do so."

modriano 7y ago
I put quotes around the phrase ("have an obligation to their shareholders to be profitable") because even though it's not technically true, it has become a self-reinforcing platitude. Investors enforce that "rule", regardless of the actual law. If Blizzard-Activision said "we are willing to forgo the massive Chinese market and also we want Tencent to immediately divest from their 5% ownership stake", institutional investors would run, and the owners of capital would squeeze hard (as we have seen with Blizzard-Activision, which, to date, hasn't backed down). That's the system we have.