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Fiduciary responsibility to maximize profits is a myth. It’s something that businesses hide their unethical behavior behind, but there’s no law that requires it

Fiduciary responsibility to maximize profits is a myth. It’s something that businesses hide their unethical behavior behind, but there’s no law that requires it according to the US Supreme Court. https://www.nytimes.com/roomfordebate/2015/04/16/what-are-corporations-obligations-to-shareholders/corporations-dont-have-to-maximize-profits https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co...

Hnrobert42 5y ago
Your link doesn’t really support your argument. Your link argues that pursuit of profit does not fulfill the fiduciary responsibility to shareholders. My contention was that a fiduciary responsibility exists. That contention is not contested by your article.
hcurtiss 5y ago
True, but there definitely is a fiduciary duty, and shareholder derivative lawsuits for breach of that duty are definitely a thing. They are usually substantiated by irresponsible decisions producing low returns. The analysis is complicated, but in the end, the more poorly the company you are managing performs due to your deliberate decisions, the more likely you are to elicit a shareholder derivative suit. Generally speaking, the best way to keep your shareholders happy is to make them money. In my view, this is as it should be. I’d rather executives in public companies not use my money to pursue their own personal moral crusades. They can use their own money to do that. As can I.
- twobitshifter 5y ago
  The shareholder lawsuits will go nowhere according to the business judgment rule, unless the board is engaged in illegal behavior. If Google chose not to collude with Facebook or lie to their customers about providing the best price, shareholders would have no cause to sue. Now that this has come to light, they may be more likely to sue if it’s deemed that information about project Jedi was withheld from shareholder reports and that information was important to understanding Google’s returns in banner ad auctions.

Hnrobert42 5y ago

Your link doesn’t really support your argument. Your link argues that pursuit of profit does not fulfill the fiduciary responsibility to shareholders. My contention was that a fiduciary responsibility exists. That contention is not contested by your article.

hcurtiss 5y ago

True, but there definitely is a fiduciary duty, and shareholder derivative lawsuits for breach of that duty are definitely a thing. They are usually substantiated by irresponsible decisions producing low returns. The analysis is complicated, but in the end, the more poorly the company you are managing performs due to your deliberate decisions, the more likely you are to elicit a shareholder derivative suit. Generally speaking, the best way to keep your shareholders happy is to make them money. In my view, this is as it should be. I’d rather executives in public companies not use my money to pursue their own personal moral crusades. They can use their own money to do that. As can I.

twobitshifter 5y ago
The shareholder lawsuits will go nowhere according to the business judgment rule, unless the board is engaged in illegal behavior. If Google chose not to collude with Facebook or lie to their customers about providing the best price, shareholders would have no cause to sue. Now that this has come to light, they may be more likely to sue if it’s deemed that information about project Jedi was withheld from shareholder reports and that information was important to understanding Google’s returns in banner ad auctions.