4 ms·

Just common sense. People invest in companies to get more money, not to lose money. There are exceptions, they are very rare, especially for public companies.

Just common sense. People invest in companies to get more money, not to lose money. There are exceptions, they are very rare, especially for public companies. Moreover, CEO is legally obliged to work in the interests of shareholders. That is the law, and that is one of many reasons why corporation flourish in the US: you can buy stocks and be protected from management deciding to waste money listening to each immature employee.

tablespoon 5y ago
> Just common sense. People invest in companies to get more money, not to lose money. There are exceptions, they are very rare, especially for public companies. Yeah, that's why investors invest, but you (like many people) are forgetting that society allows companies to exist in the first place: to provide social value and increase the general welfare. That's not measured in how much money a company makes for its investors. If an employee finds themselves working for a company that's hurting society, their primary duty is to stop that harm, not to be circumspect of the investor's profits.
- asteroidbelt 5y ago
  > If an employee finds themselves working for a company that's hurting society, their primary duty is to stop that harm, not to be circumspect of the investor's profits. An employee may report the violation of the law to the authorities, but generally employee should not be the authority themself. Especially, when their view on what is harm is very subjective.
otterley 5y ago
This should be posted automatically every time someone mindlessly parrots the myth about the duty to maximize shareholder value: https://corpgov.law.harvard.edu/2012/06/26/the-shareholder-value-myth/ https://corpgov.law.harvard.edu/2012/06/26/the-shareholder-v...
- mnowicki 5y ago
  I didn't know that there were no laws requiring companies to act in the interest of shareholders, I guess that's a common myth. It still seems pretty evident that the power structure at larger companies necessitates that people do act in the interest of investors - as doing so is in their own best interest. I'm no expect and I'm sure more educated people could argue both sides of that though. In the end, I think the behavior of companies that exist is at the very least enough to suggest that the organization of companies in capitalism motivates profit above all else - to the point where horrible acts are committed frequently and are expected from larger corporations
  - otterley 5y ago
    Executives certainly get rewarded for delivering good performance, but it really depends on what the reward structure is. This is where the board of directors comes in - they can set guidelines that dictate what's acceptable and what's not. For example, they could provide bonuses for making environmental improvements such as reducing pollution, or they could withhold them if the company gets in trouble for exploitation or criminal activity.
- asteroidbelt 5y ago
  That link does not really explain anything, only tries to sell the book. Also the article emphasizes the difference between share price and shareholder value, which is correct, but I did not say about share price. So, that link really adds nothing to the conversation.

tablespoon 5y ago

> Just common sense. People invest in companies to get more money, not to lose money. There are exceptions, they are very rare, especially for public companies. Yeah, that's why investors invest, but you (like many people) are forgetting that society allows companies to exist in the first place: to provide social value and increase the general welfare. That's not measured in how much money a company makes for its investors. If an employee finds themselves working for a company that's hurting society, their primary duty is to stop that harm, not to be circumspect of the investor's profits.

asteroidbelt 5y ago
> If an employee finds themselves working for a company that's hurting society, their primary duty is to stop that harm, not to be circumspect of the investor's profits. An employee may report the violation of the law to the authorities, but generally employee should not be the authority themself. Especially, when their view on what is harm is very subjective.

otterley 5y ago

This should be posted automatically every time someone mindlessly parrots the myth about the duty to maximize shareholder value: https://corpgov.law.harvard.edu/2012/06/26/the-shareholder-value-myth/ https://corpgov.law.harvard.edu/2012/06/26/the-shareholder-v...

mnowicki 5y ago
I didn't know that there were no laws requiring companies to act in the interest of shareholders, I guess that's a common myth. It still seems pretty evident that the power structure at larger companies necessitates that people do act in the interest of investors - as doing so is in their own best interest. I'm no expect and I'm sure more educated people could argue both sides of that though. In the end, I think the behavior of companies that exist is at the very least enough to suggest that the organization of companies in capitalism motivates profit above all else - to the point where horrible acts are committed frequently and are expected from larger corporations
- otterley 5y ago
  Executives certainly get rewarded for delivering good performance, but it really depends on what the reward structure is. This is where the board of directors comes in - they can set guidelines that dictate what's acceptable and what's not. For example, they could provide bonuses for making environmental improvements such as reducing pollution, or they could withhold them if the company gets in trouble for exploitation or criminal activity.
asteroidbelt 5y ago
That link does not really explain anything, only tries to sell the book. Also the article emphasizes the difference between share price and shareholder value, which is correct, but I did not say about share price. So, that link really adds nothing to the conversation.