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> The function of the CEO of a publicly traded company is to execute on major objectives of the firm. Amongst the major objectives of a firm there is honoring
by foul 4y ago
> The function of the CEO of a publicly traded company is to execute on major objectives of the firm.
Amongst the major objectives of a firm there is honoring debts and shareholders are mostly creditors.
- AlbertCory 4y ago> shareholders are mostly creditors You need to understand the fundamental difference between debt and equity. A creditor gets his money back with interest, and that's all. The firm could prosper or flail and it makes no difference as long as they pay him back. If the firm goes bankrupt, he's first in line for what's left of it. A stockholder might get nothing back, but if the firm prospers, he shares in it. He's last in line in a bankruptcy.
- foul 4y ago"Mostly" is there exactly because they trade risk for power (and a virtually endless profit, in the best case scenario). Edit: With that power they may notice a gap in capital during a financial crisis, and they may force the firm to fill it with layoffs.
- AlbertCory 4y agoI don't know if you've ever studied econ, accounting, or finance, but I doubt it. the second sentence is beyond normal ignorance. We're done here.
- sokoloff 4y agoA shareholder is not a creditor. They are an investor. A bond-holder or other lender is a creditor.