4 ms·

Isn't that an "old wives tale" that doesn't have any basis in reality? You are correct. Nobody has ever been able to point to a law requiring companies to max

Isn't that an "old wives tale" that doesn't have any basis in reality? You are correct. Nobody has ever been able to point to a law requiring companies to maximize profits for shareholders at all costs. In fact, there are thousands and thousands of companies that exist with a primary purpose of doing things other than making money for their shareholders. Any "legal" obligation to "maximize shareholder value" started out as a way to excuse the greed of other people, but falls flat upon even cursory examination.

itsoktocry 3y ago
Exactly. Having a fiduciary duty to act in shareholder's interests (a very common sense rule) is a long way from "maximizing shareholder profits at all costs", even if those sometimes align.
nologic01 3y ago
"An activist shareholder is a shareholder who uses an equity stake in a corporation to put pressure on its management" https://en.wikipedia.org/wiki/Activist_shareholder https://en.wikipedia.org/wiki/Activist_shareholder I am not excusing greed. I am just saying that if shareholders are focused on financial gain the corporate management is obliged to deliver. Not all shareholders are greedy. But overwhelmingly they are.
- itsoktocry 3y ago
  >An activist shareholder is a shareholder who uses an equity stake in a corporation to put pressure on its management Would you be surprised to learn that there are shareholder groups that use their equity claims to pursue environmental, DEI or other goals that benefit society? >Not all shareholders are greedy. But overwhelmingly they are. Not even close. The vast majority of shareholders own stock through ETFs and pay no attention to the finances (or politics) of the companies they own. The fiduciary rule is to prevent executives from running the company in their interest, as opposed to the interests of the silent shareholders who actually own the company.
  - swexbe 3y ago
    >Not even close. The vast majority of shareholders own stock through ETFs and pay no attention to the finances (or politics) of the companies they own. Right, but many would sell their ETFs and buy others if they suddenly started to deliver below market returns.
  - nologic01 3y ago
    I am quite aware of impact investors, ESG etc. The space is full of convulsions and strife [1]. But its a different debate. The point I was trying to make is that corporate managers are legally controlled by shareholders, its not a myth. Actually the difficulty with sustainable investments shows how difficult to rely on shareholder's values to goad corporates in the "right" direction: unless the risk is clear, present and impossible to disguise there is just enormous resistance to interfere with profitable opportunities. Now in the context of digital information oligopolies good luck convincing shareholders that their big tech darlings are detrimental for the future of digital society. [1] https://www.pionline.com/esg/blackrock-voted-against-record-91-shareholder-proposals-2023-proxy-season https://www.pionline.com/esg/blackrock-voted-against-record-...

itsoktocry 3y ago

Exactly. Having a fiduciary duty to act in shareholder's interests (a very common sense rule) is a long way from "maximizing shareholder profits at all costs", even if those sometimes align.

nologic01 3y ago

"An activist shareholder is a shareholder who uses an equity stake in a corporation to put pressure on its management" https://en.wikipedia.org/wiki/Activist_shareholder https://en.wikipedia.org/wiki/Activist_shareholder I am not excusing greed. I am just saying that if shareholders are focused on financial gain the corporate management is obliged to deliver. Not all shareholders are greedy. But overwhelmingly they are.

itsoktocry 3y ago
>An activist shareholder is a shareholder who uses an equity stake in a corporation to put pressure on its management Would you be surprised to learn that there are shareholder groups that use their equity claims to pursue environmental, DEI or other goals that benefit society? >Not all shareholders are greedy. But overwhelmingly they are. Not even close. The vast majority of shareholders own stock through ETFs and pay no attention to the finances (or politics) of the companies they own. The fiduciary rule is to prevent executives from running the company in their interest, as opposed to the interests of the silent shareholders who actually own the company.
- swexbe 3y ago
  >Not even close. The vast majority of shareholders own stock through ETFs and pay no attention to the finances (or politics) of the companies they own. Right, but many would sell their ETFs and buy others if they suddenly started to deliver below market returns.
- nologic01 3y ago
  I am quite aware of impact investors, ESG etc. The space is full of convulsions and strife [1]. But its a different debate. The point I was trying to make is that corporate managers are legally controlled by shareholders, its not a myth. Actually the difficulty with sustainable investments shows how difficult to rely on shareholder's values to goad corporates in the "right" direction: unless the risk is clear, present and impossible to disguise there is just enormous resistance to interfere with profitable opportunities. Now in the context of digital information oligopolies good luck convincing shareholders that their big tech darlings are detrimental for the future of digital society. [1] https://www.pionline.com/esg/blackrock-voted-against-record-91-shareholder-proposals-2023-proxy-season https://www.pionline.com/esg/blackrock-voted-against-record-...