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I read once about a corporate death penalty that I think should really be made into law: where a corporate entity commits something so heinous that a fine or wh
by ToucanLoucan 3y ago
I read once about a corporate death penalty that I think should really be made into law: where a corporate entity commits something so heinous that a fine or what have you is simply not enough. I cannot find the link but the process would go about such as:
- The entire entity would be taken on ownership by the government agency at play. No existing stakeholders would be paid anything for this and operations would continue, assuming the operation is worth salvaging of course, with the corrections made needed.
- The entity would then be either sold in-whole or carved up into pieces to other large businesses. Shareholders, stakeholders, or investors are not made whole: instead, the revenue from these sales is used to repay or remediate the damage caused by the company.
- Top level leadership is, if it's felt is required, charged for neglecting their duties as leaders and fined, jailed, or otherwise punished.
- In the end the original entity is dissolved entirely, any remaining assets are sold in a process similar to the above, and the name is added to a "dead corporation" list and cannot be used at any time in the future.
- oakwhiz 3y agoSounds like a gift to short sellers.
- pigeonhole123 3y agoAllowing fraud is a gift to speculators just as much. And criminals.
- orbz 3y agoWouldn’t this reduce the share price, effectively baking in the externality risk?
- lmm 3y agoIt would reduce the share price of companies that shareholders thought were at high risk of committing a major crime, and create an incentive for companies that care about their share price to make it very clear that they weren't going to do crime and e.g. have policies to prevent it.
- ddol 3y agoNationalising the corporation would delist it from an exchange, preventing stock sales.
- kortilla 3y agoMeaning short sellers never have to buy it back.
- arrosenberg 3y agoThat seems like the correct incentive, no? If the shorts believe a company is (e.g.) poisoning 100,000 people in a large suburb, shouldn't they profit massively if the government agrees and seizes it?
- kortilla 3y agoIt should be. The entire job of short sellers is to be incentivized to ferret out bad companies.
- ekianjo 3y ago> The entire entity would be taken on ownership by the government agency We should not trust government agencies as they have zero accountability either. It is even worse.
- kerkeslager 3y agoBut this doesn't solve the problem in any way. Most shareholders didn't know PFAs were harmful, yet you're proposing they bear the punishment. Meanwhile, the people who did know that PFAs were harmful, walk away with years of salary with raises due to their increased performance due to killing people, and potentially even the profits from sale of stock before their murders were discovered. The entire problem here is that people, not corporations, make decisions, and people, not corporations, need to be held responsible for their own decisions. When people decide to hide information like this for their own benefit, those people need to be held responsible.