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Shareholders also don't care if the behavior continues so long as the profits from the behavior continue to vastly outweigh the cost of the activity in question
by NickC25 3y ago
Shareholders also don't care if the behavior continues so long as the profits from the behavior continue to vastly outweigh the cost of the activity in question.
If the fine is $ABC, and that fine never changes, but profits grow from $ABC x3 to $ABC x10, shareholders will actually get mad that the corporation doesn't continue the activity in question because there's net profit growth.
Sadly, sometimes the cost of quelling an FCC or SEC violation charge is simple "lobbying".
- ethbr1 3y agoThe business community seems pretty upset by the penalties the SEC has been levying lately... https://news.bloomberglaw.com/us-law-week/the-supreme-court-should-curb-the-secs-excessive-penalties https://news.bloomberglaw.com/us-law-week/the-supreme-court-... (The Supreme Court declined to hear the case)
- dchftcs 3y agoTo be fair, they are not mutually exclusive. Businesses are incentivized to fight penalties as long as they think the legal costs are small enough compared to the fines themselves, regardless whether the activity their fine on was still profitable after the fine.