5 ms·

Do they not have a fiduciary responsibility to their public shareholders now that they did not before? If a random company with a very different mission (say,

Do they not have a fiduciary responsibility to their public shareholders now that they did not before? If a random company with a very different mission (say, Intel) comes along and offers to purchase the company at a decent share price premium they pretty much have to take it, right?

p_l 2y ago
Doesn't necessarily work that way (shareholders can sell their shares still)... ... but it's how it's marketed to people so they believe it and follow Friedman's doctrine like gospel.
- robertlagrant 2y ago
  Who does this marketing?
  - p_l 2y ago
    Everyone repeating the mantra about how caring for shareholder profits is the fiduciary duty of the corporation leadership, and how it's "a law". At this point it's a self-propagating meme. I frequently encounter people, learned people, who act like it is a law or moral principle (in fact, corporations aren't even required to be for profit even when operating commercially, they are just an organizational structure). When questioned, nobody can cleanly point where they learnt it, but actual check shows that Friedman Doctrine[1] was never written into law. [1] https://en.wikipedia.org/wiki/Friedman_doctrine https://en.wikipedia.org/wiki/Friedman_doctrine
    - robertlagrant 2y ago
      Ah - I see. I don't think that's marketing; just a common misconception. But yes, I've seen that too. No idea if it's true or not. Presumably it changes depending on the country.
      - p_l 2y ago
        It's pretty much untrue everywhere. That said, the misconception can be tracked down to one person in 1980... that sounds more like an idea that got marketed - whether by Friedman teaching in university in certain way, or his students continuing that, or people taking the idea from his paper and teaching that... or newspapers passing it further... At some point you start to wonder cui bono?
Angostura 2y ago
If you are talking about a fiduciary duty to "maximise profits", no that doesn't exist.
- jrmg 2y ago
  I never get why people think this does exist. If it did, wouldn’t every company be obliged to get out of the business they’re in and start doing what would be most profitable right now? Obviously that would be absurd.
  - georgyo 2y ago
    Switching gears is expensive, and if every company switched to "the most profitable thing" it wouldn't be profitable. This automatically prevents them from mindlessly switching.
    - jrmg 2y ago
      Yes, that’s part of why it is absurd.
- chx 2y ago
  Just as an interesting tidbit while we here are talking about UK companies it doesn't even exist in the US. The SCOTUS said so: > 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. https://www.law.cornell.edu/supremecourt/text/13-354 https://www.law.cornell.edu/supremecourt/text/13-354

p_l 2y ago

Doesn't necessarily work that way (shareholders can sell their shares still)... ... but it's how it's marketed to people so they believe it and follow Friedman's doctrine like gospel.

robertlagrant 2y ago
Who does this marketing?
- p_l 2y ago
  Everyone repeating the mantra about how caring for shareholder profits is the fiduciary duty of the corporation leadership, and how it's "a law". At this point it's a self-propagating meme. I frequently encounter people, learned people, who act like it is a law or moral principle (in fact, corporations aren't even required to be for profit even when operating commercially, they are just an organizational structure). When questioned, nobody can cleanly point where they learnt it, but actual check shows that Friedman Doctrine[1] was never written into law. [1] https://en.wikipedia.org/wiki/Friedman_doctrine https://en.wikipedia.org/wiki/Friedman_doctrine
  - robertlagrant 2y ago
    Ah - I see. I don't think that's marketing; just a common misconception. But yes, I've seen that too. No idea if it's true or not. Presumably it changes depending on the country.
    - p_l 2y ago
      It's pretty much untrue everywhere. That said, the misconception can be tracked down to one person in 1980... that sounds more like an idea that got marketed - whether by Friedman teaching in university in certain way, or his students continuing that, or people taking the idea from his paper and teaching that... or newspapers passing it further... At some point you start to wonder cui bono?

Angostura 2y ago

If you are talking about a fiduciary duty to "maximise profits", no that doesn't exist.

jrmg 2y ago
I never get why people think this does exist. If it did, wouldn’t every company be obliged to get out of the business they’re in and start doing what would be most profitable right now? Obviously that would be absurd.
- georgyo 2y ago
  Switching gears is expensive, and if every company switched to "the most profitable thing" it wouldn't be profitable. This automatically prevents them from mindlessly switching.
  - jrmg 2y ago
    Yes, that’s part of why it is absurd.
chx 2y ago
Just as an interesting tidbit while we here are talking about UK companies it doesn't even exist in the US. The SCOTUS said so: > 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. https://www.law.cornell.edu/supremecourt/text/13-354 https://www.law.cornell.edu/supremecourt/text/13-354