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The concept of "greedy companies" is IMHO counterproductive. If a kid is being greedy, and that's the default state for a young child, you tell them to share a

The concept of "greedy companies" is IMHO counterproductive. If a kid is being greedy, and that's the default state for a young child, you tell them to share and eventually they learn to do so (well, most of us, anyway) because it's in their best interest to do so. But companies are explicitly designed from the ground up to maximize profits at the expense of everything else, to the point where they get sued if they don't maximize shareholder value. So of course they're going to be "greedy" and yank up prices as much as they can, and telling them to "share" is going to accomplish nothing: it's going to need much more fundamental reforms to actually change the way they're incentivized to operate.

kwhitefoot 3y ago
> to the point where they get sued if they don't maximize shareholder value. I'm pretty sure that 'maximizing shareholder value' is not a requirement for a company. Not even in the US. > they get sued I've seen this claim before but no one ever provides a link to any cases. So, do they? Are there any easily accessible descriptions of such events?
- Quarrel 3y ago
  In the US, Director's have a fiduciary duty to the company, and in particular a duty of loyalty. The duty of loyalty largely means that you must act in the interests of the company and its shareholders- this is where I think most people get to the 'maximizing shareholder value'. However, afaik, as long as you act in good faith, and take due care, then I don't think there is any case law saying that if you decided that a lower profit margin (for instance), would be better for the company long term, even if some shareholders disagree, that you'd have any issues. (ie, I think you're correct, it is totally overblown on the net that they MUST MAKE MONEY)
  - wasimanitoba 3y ago
    That characterization might be over blown, but it's functionally equivalent to reality because hostile takeovers are a thing. Any board of directors that isn't ruthlessly maximizing profit is likely to be replaced by a temporary majority of anonymous shareholders with no attachment to the underlying company beyond whatever quick buck they can make off the stock.
  - remich 3y ago
    The precedent in the Delaware Court of Chancery (where pretty much all of the litigation would take place) explicitly does not endorse the idea that corporate fiduciaries must focus on short-term profit making (i.e., maximizing shareholder value) above all other obligations. That's why we don't really have the type of lawsuits that you're talking about. What we do have is the type of suit that is "everything is securities fraud" where the allegation is that corporate fiduciaries committed securities fraud by omitting or concealing information that would have tended to dent their stock price.
- epicureanideal 3y ago
  Apple even publicly declared its interest in making its products recyclable and told investors who didn’t like it to “get out of this stock”, so it seems like it’s possible to challenge the pure profit assumption.
- resolutebat 3y ago
  Whether it's a "requirement" or not is irrelevant (and you'll note that I did not claim it is). The part that matters is that companies in practice do act to maximize profit and hand that profit to their shareholders.
  - kwhitefoot 3y ago
    > companies in practice do act to maximize profit Again this blanket statement seems to be at odds with observation.
das_keyboard 3y ago
> But companies are explicitly designed from the ground up to maximize profits at the expense of everything else I don't think this would be as much of a problem if said profits would be used in the companies interest. But instead the money is used to make some rich CEOs & shareholders even richer while semi-legally avoiding as much taxation as possible.
- resolutebat 3y ago
  Well, that's the thing, if a company is controlled by its stakeholders of course the stakeholders will funnel all the profits straight into their own pockets. This is exactly why we have benefits (B) corporations, where companies are required to support the original mission of the company. Of course, the problem is that the vast majority of companies out there are not B corps.
prottog 3y ago
> to the point where they get sued if they don't maximize shareholder value This is a huge exaggeration. Corporate executives sometimes get sued if they actively destroy shareholder value. Approximately nobody is getting sued for "not maximizing" it.
- remich 3y ago
  If anyone is curious to learn more, look up the "business judgment rule" with reference to D&O litigation.

kwhitefoot 3y ago

> to the point where they get sued if they don't maximize shareholder value. I'm pretty sure that 'maximizing shareholder value' is not a requirement for a company. Not even in the US. > they get sued I've seen this claim before but no one ever provides a link to any cases. So, do they? Are there any easily accessible descriptions of such events?

Quarrel 3y ago
In the US, Director's have a fiduciary duty to the company, and in particular a duty of loyalty. The duty of loyalty largely means that you must act in the interests of the company and its shareholders- this is where I think most people get to the 'maximizing shareholder value'. However, afaik, as long as you act in good faith, and take due care, then I don't think there is any case law saying that if you decided that a lower profit margin (for instance), would be better for the company long term, even if some shareholders disagree, that you'd have any issues. (ie, I think you're correct, it is totally overblown on the net that they MUST MAKE MONEY)
- wasimanitoba 3y ago
  That characterization might be over blown, but it's functionally equivalent to reality because hostile takeovers are a thing. Any board of directors that isn't ruthlessly maximizing profit is likely to be replaced by a temporary majority of anonymous shareholders with no attachment to the underlying company beyond whatever quick buck they can make off the stock.
- remich 3y ago
  The precedent in the Delaware Court of Chancery (where pretty much all of the litigation would take place) explicitly does not endorse the idea that corporate fiduciaries must focus on short-term profit making (i.e., maximizing shareholder value) above all other obligations. That's why we don't really have the type of lawsuits that you're talking about. What we do have is the type of suit that is "everything is securities fraud" where the allegation is that corporate fiduciaries committed securities fraud by omitting or concealing information that would have tended to dent their stock price.
epicureanideal 3y ago
Apple even publicly declared its interest in making its products recyclable and told investors who didn’t like it to “get out of this stock”, so it seems like it’s possible to challenge the pure profit assumption.
resolutebat 3y ago
Whether it's a "requirement" or not is irrelevant (and you'll note that I did not claim it is). The part that matters is that companies in practice do act to maximize profit and hand that profit to their shareholders.
- kwhitefoot 3y ago
  > companies in practice do act to maximize profit Again this blanket statement seems to be at odds with observation.

das_keyboard 3y ago

> But companies are explicitly designed from the ground up to maximize profits at the expense of everything else I don't think this would be as much of a problem if said profits would be used in the companies interest. But instead the money is used to make some rich CEOs & shareholders even richer while semi-legally avoiding as much taxation as possible.

resolutebat 3y ago
Well, that's the thing, if a company is controlled by its stakeholders of course the stakeholders will funnel all the profits straight into their own pockets. This is exactly why we have benefits (B) corporations, where companies are required to support the original mission of the company. Of course, the problem is that the vast majority of companies out there are not B corps.

prottog 3y ago

> to the point where they get sued if they don't maximize shareholder value This is a huge exaggeration. Corporate executives sometimes get sued if they actively destroy shareholder value. Approximately nobody is getting sued for "not maximizing" it.

remich 3y ago
If anyone is curious to learn more, look up the "business judgment rule" with reference to D&O litigation.