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Except it’s not. Their duty to the stockholders is to be responsible, not to maximize profits. If they feel their news division is important to the company and
by macintux 5y ago
Except it’s not. Their duty to the stockholders is to be responsible, not to maximize profits. If they feel their news division is important to the company and the community, that’s a perfectly valid reason to maintain it.
- manquer 5y agoActually duty to the shareholder is do as shareholders ask . Those things could be responsible or profit maximizing or not. Legally it is hard to define either as they vague and subjective, obeying the board directions is much easier to define and codify in law. If management does not do as shareholders ask , shareholders can get management replaced by nominating and voting for directors who want the same thing in the next general meeting or call for a emergency one. Management reports to the board and the board reports to the shareholders. It is hard to counter the direct wishes of all shareholders combined. However rarely all shareholders want the same thing. Management themselves own substantial shares and obviously will feel different for example.