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You don't have to take every profit opportunity if you believe it would jeopardize the long-term value of the company. If the shareholders don't agree and want

You don't have to take every profit opportunity if you believe it would jeopardize the long-term value of the company. If the shareholders don't agree and want you to maximize their short term interests instead, their recourse is to invest in a different company. It seems hard for some people to understand that as well. Within the bounds of the prospectus, reasonable people can disagree on how to maximize the value of a corporation, and the shareholders don't get to decide how to do that. They only get to decide how to allocate their funds. It is the job of corporate management to decide what risks are worth taking.

jampekka 3y ago
Yes, there's a lot of leeway on how to maximize the shareholder profit and on what timescale. But in any case the decisions can't be justified by e.g. morals, especially if it means monetary loss (unless no shareholder complains of course).
- philipov 3y ago
  It's just a matter of how you frame it. The view to take is that alienating customers and employees by violating e.g. morality, is not in the best interests of shareholders. Saying that the long term value of the company is best served by avoiding banditry is not only within management's discretion, it happens to be true. You can't even point to successful companies that treat consequences from violating laws or morality as just a cost of doing business and say that forces everyone else to follow suit. What might be good for one company isn't necessarily good for another. The fact that companies advertising on twitter don't want their products appearing next to far right diatribe is proof enough that considering morality and ethics is important to maximizing value.
  - jampekka 3y ago
    That's still profit maximizing. If they can't argue the "moral" decision on profit rationale it's illegal. LLCs are amoral by design. It can be argued that this amorality can result in good outcomes when e.g. regulated proprerly. But that doesn't make the LLCs themselves moral actors. Mistaking companies for moral actors results in folly like letting them regulate themselves.
    - philipov 3y ago
      You are arguing against a strawman. No one ever said that corporations are moral actors. You said that companies are not allowed to have a mission other than chasing profits. As has already been pointed out, OpenAI is not a for-profit corporation. These are a thing that really exists, and as the name implies, they are not obligated to show any profits. You are also conflating 3 things: Profits, The Best Interests Of Shareholders, and The Value of the Corporation. These are all distinct things, not synonyms. The thing that the corporation will consider to be the value it maximizes is something you will find in its prospectus. The prospectus is what lays out the promises the corporation makes to its shareholders. Nonprofit corporations specify their mission, and while their officers are still expected to act as good fiduciaries, this does not mean maximizing profit.

jampekka 3y ago

Yes, there's a lot of leeway on how to maximize the shareholder profit and on what timescale. But in any case the decisions can't be justified by e.g. morals, especially if it means monetary loss (unless no shareholder complains of course).

philipov 3y ago
It's just a matter of how you frame it. The view to take is that alienating customers and employees by violating e.g. morality, is not in the best interests of shareholders. Saying that the long term value of the company is best served by avoiding banditry is not only within management's discretion, it happens to be true. You can't even point to successful companies that treat consequences from violating laws or morality as just a cost of doing business and say that forces everyone else to follow suit. What might be good for one company isn't necessarily good for another. The fact that companies advertising on twitter don't want their products appearing next to far right diatribe is proof enough that considering morality and ethics is important to maximizing value.
- jampekka 3y ago
  That's still profit maximizing. If they can't argue the "moral" decision on profit rationale it's illegal. LLCs are amoral by design. It can be argued that this amorality can result in good outcomes when e.g. regulated proprerly. But that doesn't make the LLCs themselves moral actors. Mistaking companies for moral actors results in folly like letting them regulate themselves.
  - philipov 3y ago
    You are arguing against a strawman. No one ever said that corporations are moral actors. You said that companies are not allowed to have a mission other than chasing profits. As has already been pointed out, OpenAI is not a for-profit corporation. These are a thing that really exists, and as the name implies, they are not obligated to show any profits. You are also conflating 3 things: Profits, The Best Interests Of Shareholders, and The Value of the Corporation. These are all distinct things, not synonyms. The thing that the corporation will consider to be the value it maximizes is something you will find in its prospectus. The prospectus is what lays out the promises the corporation makes to its shareholders. Nonprofit corporations specify their mission, and while their officers are still expected to act as good fiduciaries, this does not mean maximizing profit.