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> No they don't, they get passed on to shareholders. The market cap of the company decreases by the amount of the fine (plus any predicted future effect of the
by kerkeslager 3y ago
> No they don't, they get passed on to shareholders. The market cap of the company decreases by the amount of the fine (plus any predicted future effect of the lost money) and the stock price goes down to reflect that.
Ehh, if they have to, but execs are going to do their very best not to pass on costs to shareholders.
Even if shareholders foot the bill, why would that be a desirable outcome? Are you arguing that we have to fine corporations instead of holding the decision makers responsible? What do you have against people taking responsibility for their own actions?
> If the company could get away with paying workers less or decreasing its workforce in order to boost profitability, it already would have. It's not waiting for a fine to justify doing so.
But they couldn't pay workers less or decrease workforce, because they needed those workers to execute the unethical business plan. They weren't waiting for a fine to cut workers, they were waiting for the cash cow to stop producing milk to cut workers who were necessary to keep the cash cow going.
- ricktdotorg 3y ago> Ehh, if they have to, but execs are going to do their very best not to pass on costs to shareholders. this is the KEY thing that is always missed. shareholder happiness level: monitored at all times, a KPI of utmost significance at the most senior levels. worker/employee happiness level: monitored at the Q{1-4} level at best, a KPI of least significance at all levels.
- crazygringo 3y ago> but execs are going to do their very best not to pass on costs to shareholders. But it's not up to execs, execs don't control the share price, no matter how much they wish they could. The market does. The market sees the fine, it adjusts the market cap, done. > Even if shareholders foot the bill, why would that be a desirable outcome? Because shareholders elected the board. That's the entire foundation of joint-stock corporations, that shareholders get the rewards but also suffer the losses.
- kerkeslager 3y ago> But it's not up to execs, execs don't control the share price, no matter how much they wish they could. The market does. The market sees the fine, it adjusts the market cap, done. Not directly, but surely I don't need to explain to you what effect cutting costs typically has on share price? > Because shareholders elected the board. That's the entire foundation of joint-stock corporations, that shareholders get the rewards but also suffer the losses. Sorry, I'm missing the part of this where you answered the question. Why is this a desirable outcome? What is the problem with holding human beings responsible for their own actions? I don't give a fuck about the foundation of joint-stock corporations. If the foundations of joint-stock corporations result in sociopaths profiting off harming people with no consequences, the foundations of joint-stock corporations need to change or be discarded completely.
- crazygringo 3y ago> surely I don't need to explain to you what effect laying off a bunch of workers might have on share price? Surely you do, because sometimes the stock goes up if the workers weren't needed in the first place, sometimes it goes down because it shows the company is flailing, and sometimes it does nothing because it's business as usual. You're operating under an illusion that execs have control over how the market will respond. > Sorry, I'm missing the part of this where you answered the question. And I'm missing the part where anything I wrote gave you the excuse to be rude. Please be civil, this is HN.
- kerkeslager 3y ago[flagged]
- frankfrankfrank 3y agoI had to double check and you were not responding to me, but yes, it was in fact you who was passive aggressive rude and underhanded with your snide “surely I don’t have to”, conceited, pretentious, snarky response. If you’re going to accuse others of being rude, you should start. This is not reddit. Are you lost? Pretentious pomp should best be left at the door anywhere outside of the reddit quarantine of awful humans.
- htss2013 3y agoWhy would you assume the market efficiently adjusts for things like fines? Have you seen the stock market lately? There is at best a loose correlation between business reality and stock prices. Why would there be a 1 to 1 relationship between the price of stocks and reality, when most investing is blind passive investing that ignores reality by design?
- injidup 3y agoIf you are sure stocks are over or under priced then go mortgage your house and trade your financial security against the market and win.
- phkahler 3y agoYou can't predict when the market will stop behaving stupidly. Betting against stupid is often considered a bad idea.
- AngryData 3y agoIt doesn't really matter that much if he thinks or knows a stock is under or over valued if he also expects that bad valuation to be maintained for any significant length of time. Stock prices are not rational and there is no consistent way to calculate the value of a company. An expensive media campaign that accomplishes nothing related to their business offerings and may even lose the company significant amounts of money can end up raising a stock price. And you also don't have unlimited time to try and wait out stocks which also have so many other random factors being thrown in over the years.
- gmerc 3y agolaughs in share buybacks
- agentgumshoe 3y agoSounds like an idealised view of it. In reality I would think shareholders are ok with any plan the exec/board has to avoid such losses
- 8note 3y agoWhat does a fine day about future growt, isn't the expectation of fines already priced in, so when it happens, the stock price should go up?
- scott_w 3y agoYou make the fine bigger than the expected profit and now you have a negative growth factor built in. The incentive now exists to stop the fines.
- lukas099 3y agoIf the cash cow isn't going then the fines were successful. Plus share prices will drop because the business can no longer do the unethical thing.