That top answer on stackexchange is a pretty thorough explanation. Another perspective to consider is that strategic initiatives almost always incur a cost in t

That top answer on stackexchange is a pretty thorough explanation. Another perspective to consider is that strategic initiatives almost always incur a cost in the short term. You take a small loss in the short term with the idea that you will come out better in the long term. So the idea about maximizing profits for shareholders is meaningless without a time frame. If I'm a short term investor, I probably want the company to layoff some employees so that it improves the bottomline immediately, allowing me to exit. If I'm a long term investor, I probably wouldn't be so thrilled because it's a sign that the company has messed up. And so while there is no, and cannot be, this legal obligation, the reality is that major shareholders exert influence on the direction of the company depending the time frame they are looking to exit.