3 ms·
Better products doesn't always equal more profit, which is all a company cares about
by o_m 3y ago
Better products doesn't always equal more profit, which is all a company cares about
- suddenclarity 3y agoCompanies consist of people and people care about far more things than profit for a random company. It should be obvious to anyone considering how much people hate on companies and their bosses online. It's close to 60 years ago we got the expression "the long march through the institutions".
- willcipriano 3y ago> people care about far more things than profit The "clueless" of The Gervais Principle. https://www.ribbonfarm.com/2009/10/07/the-gervais-principle-or-the-office-according-to-the-office/ https://www.ribbonfarm.com/2009/10/07/the-gervais-principle-...
- namaria 3y agoManagement of publicly traded companies in the US is required by law to put profits first.
- rented_mule 3y agoAccording to a 2014 US Supreme Court decision... "While it is certainly true that a central objective of for-profit corporations is to make money, modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not do so."[1] Public or not, people involved in a business do have fiduciary duties to their investors. But those duties are not specifically about profits. They are about "obedience, information, loyalty, and care"[2]. ---- [1] https://caselaw.findlaw.com/court/us-supreme-court/13-354.html https://caselaw.findlaw.com/court/us-supreme-court/13-354.ht... [2] https://online.hbs.edu/blog/post/fiduciary-duty-to-investors https://online.hbs.edu/blog/post/fiduciary-duty-to-investors
- namaria 3y agoRight, I spoke without basis on facts. Thank you, I have done some research and changed my opinion.
- triceratops 3y agoIncorrect and incorrect. This is just mindlessly repeated propaganda. Management has to act in shareholders' best interest. Management decisions cannot be self-serving at the expense of shareholders. Shareholders are a diverse bunch and can be interested in things besides pure profit, and companies can choose to maximize on those alternative dimensions. The Supreme Court said as recently as 2016: "Modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not."[1] From that same article, there's more: "More to the point, corporate directors are protected from most interference when it comes to running their business by a doctrine known as the business judgment rule. It says, in brief, that so long as a board of directors is not tainted by personal conflicts of interest and makes a reasonable effort to stay informed, courts will not second-guess the board’s decisions about what is best for the company — even when those decisions predictably reduce profits or share price." 1. https://www.nytimes.com/roomfordebate/2015/04/16/what-are-corporations-obligations-to-shareholders/corporations-dont-have-to-maximize-profits https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co...
- namaria 3y agoI should have done some research before writing opinions in American corporate law. You are correct, it is not a legal obligation but a combination of hedge fund activism and CEO compensation structures that conspire for the maximization of profit and maximization of short term stock price. Thank you for pointing that out.