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'Amazon embodies the idea that companies need to “maximize shareholder value” - a total falsehood invented in the 1970s by Milton Friedman' One can agree or di
by Bostonian 6y ago
'Amazon embodies the idea that companies need to “maximize shareholder value” - a total falsehood invented in the 1970s by Milton Friedman'
One can agree or disagree with this statement of values, but it is not a dishonest "falsehood".
- jrrrr 6y agoMaybe they problem is the word "need". How do you interpret the word in this context? I read it as "are legally required to", which is a thing that can be true or false.
- macintux 6y agoCorrect, and it indeed not a legal requirement in the U.S.
- agilebodyshoppe 6y agoOf course if you want to attract investors you have to take their interests into account, thats just self preservation. but many people seem to believe that companies are legally required to maximize returns which is false.
- stupidcar 6y agoThe entire statement is in fact a falsehood, as Amazon does not embody that idea, regardless of its veracity. Amazon has never paid a dividend, and is guided as much or more by the pursuit of growth (and also "customer value" although unevenly) that simply maximising shareholder value.
- hobofan 6y agoYou don't need to pay dividends to maximize shareholder value. As you correctly point out Amazon prioritizes growth over dividends, but also with the goal of maximizing shareholder value (business is bigger/more stable/etc. -> value of shares goes up).
- tmcw 6y agoThere are two hyperlinks in that sentence that I hoped would avoid ambiguity by citing sources, but I'll make it more explicit in the copy.