2 ms·

I find it interesting that many believe a company's "CEO and board are bound by law to seek the greatest returns possible for shareholders" is actual law. Is i

I find it interesting that many believe a company's "CEO and board are bound by law to seek the greatest returns possible for shareholders" is actual law. Is it? What is this law? Companies are state entities, not federal ones. So the only federal law would be SEC stuff, right? I find it hard to believe that all 50 states have the same law. IANAL, I would appreciate someone pointing me the law or court decisions that have made this to be.

ulysses 18y ago
Two relevant Wikipedia links: http://en.wikipedia.org/wiki/Fiduciary http://en.wikipedia.org/wiki/Fiduciary http://en.wikipedia.org/wiki/Board_of_directors http://en.wikipedia.org/wiki/Board_of_directors Summary of fiduciary duty as I understand it (IANAL): An agent has a responsibility to act in his or her client's best interest. An example is a trust, which is obligated to act in the financial best interests of the beneficiary. I believe a lawyer's duty to the client and a doctor's duty to the patient are similar. In the case of a board of directors, they have a legal responsibility to act in the best interest of the shareholders.