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> Public companies have a fiduciary duty to maximize profits and investor returns. No, they don't. There are many articles on the subject, here is one: https:

• exolymph 6y ago
  In practice, firms controlled by shareholders tend to be run for the benefit of shareholders. Facebook is controlled by its founder so it's a different situation.
• colonelanguz 6y ago
  Delaware companies do. See, e.g., Frederick Hsu Living Tr. v. ODN Hldg. Corp., 2017 WL 1437308, at *18 (Del. Ch. Apr. 14, 2017) (“[T]he fiduciary relationship requires that the directors act prudently, loyally, and in good faith to maximize the value of the corporation over the long-term for the benefit of the providers of presumptively permanent equity capital . . .”). Facebook is a Delaware company.
  • aspenmayer 6y ago
    Has this law ever been enforced against a company; that is, is there a ore-existing verdict against a Delaware company for violating this statute? Or is this more of a hypothetical threat? What would the damages or penalty be for violation? It’s not like you can demand money a company should have made without cause or more importantly, verifiable harm to the counter-party.
    • aspenmayer 6y ago
      *pre-existing
    • colonelanguz 6y ago
      Certainly it has been enforced against a company (thousands of them), but in a way it is more of a hypothetical threat. I was not referring to a statutory law, but rather to fiduciary duties, which derive from the common law of equity. The quotation from the Hsu case I provided above is a clear depiction of the standard of conduct required of directors and officers of Delaware corporations. But in reality, fiduciary standards operate more like you suggested—as a hypothetical threat. The reason for this is that, although the standards of conduct demanded of Delaware directors and officers are onerous and exacting, the standard of judicial review of challenged conduct is ordinarily very relaxed. In most ordinary situations, the standard of review is the business judgment rule, which essentially punts on the question of whether a particular action violates a fiduciary duty. The idea is that courts do not supplant directors' judgment with their own. More onerous standards of review are available in other situations, such as mergers and transactions where an interested party sits on the board or is an executive. (Facebook is an interesting example of a controlled company, given Zuckerberg's ownership stake, and its decisions might be subject to more scrutiny, but procedural safeguards are generally available to cleanse even conflicted decisionmaking.) It's worth clarifying that only those to whom fiduciary duties are owed can ever sue for damages resulting from their breach. In other words, shareholders. That's how the threat gets operationalized—by a shareholder or class of shareholders suing the corporation for failing to maximize shareholder value through a fiduciary breach. Anyways, the point I really wanted to make is that shareholder value maximization really is meaningfully encoded in American corporate law. If you meant to suggest that reality is less black-and-white than that, then I hope the foregoing ramble confirms that you are correct!
      • aspenmayer 6y ago
        Thank you for typing this well thought out response! I see the fiduciary duty canard brought out and it usually functions in debate as a thought-terminating cliche. My comment was meant to elucidate whether or not it was the last word on fiduciary duty; your comment helps clarify the judicial and fiduciary reality on the ground, and really added a lot to my understanding of these issues. Thanks again.
        • colonelanguz 6y ago
  • missedthecue 6y ago
    "maximize the value over the long term" isn't the same as "upend the company to pick up a couple dimes"
    • colonelanguz 6y ago
      I agree! Were you attempting to respond to my comment, or just venting?
      • ta17711771 6y ago
        They were responding to the top level comment.