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> Before getting into that it’s worth noting that all publicly listed companies operate under a fiduciary duty to maximise profits for their shareholders. This
by civilized 4y ago
> Before getting into that it’s worth noting that all publicly listed companies operate under a fiduciary duty to maximise profits for their shareholders.
This is a myth. Lynn Stout argued against the relevance of Dodge v. Ford (1919) in this article:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1013744 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1013744
This misstep kind of undermines the rest of the piece, which now reads like a superficial just-so story in the same way.
- jacobsenscott 4y agoMyth or not - mass terminations don't maximize profits anyway. In fact it is impossible to predict what will maximize or reduce profits beyond some trivial scenarios. Imagine if you could - every company would be nearly infinitely profitable. So they can do anything under the guise of "maximizing profits" and nobody can challenge it because there is no objective measure for it.
- civilized 4y agoStout's article and follow-up book The Shareholder Value Myth both make much the same argument. She thinks people want to have a simple picture of the "purpose" of a corporation, and lean on this idea of shareholder value maximization as a crutch. In reality, a corporation is just another chaotic political body with different voting rules.