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> Current stock owners will loose half their value (which is a good enough punishment for this lack of oversight) I'm not opposed to this. But I think our corp

> Current stock owners will loose half their value (which is a good enough punishment for this lack of oversight) I'm not opposed to this. But I think our corporations should be regulated by the government, not by shareholder oversight. After all, shareholders are essentially powerless in the current system. Each individual shareholder's power is far too dilute, many people owning shares through pension funds don't even know they're shareholders, the minority shareholders have no way to contact each other to coordinate, and it's completely normal for the likes of Apple to spend billions on secret projects and the shareholders to only find out after the fact. Hell, Google even has three classes of shares - one with no voting rights, one with 1x voting rights, and a special class with 10x voting rights for Larry and Sergei ensuring they have a majority of the votes even without majority ownership. If we think shareholders are supposed to be providing oversight to companies, they need vastly more power to do so.

skizm 2y ago
Shareholders have the power to not buy the stock.
black_puppydog 2y ago
The way I read GP's argument, the (yes, very diluted, but real) "oversight" would come from the fact that every shareholder would have to base their bidding price for e.g. Boeing shares on, among other things, the probability of this company being devalued by 51% following a scandal like this. If (and I understand this is a huge "if") this kind of action was more common, you might think twice before investing into any companies that run a serious risk of direct government interaction to protect the public.
- teitoklien 2y ago
  Might work in a world where only america exists. What you are suggesting will instead lead to a downward spiral of investor confidence in investing in American companies, and letting other world powers dominate in key tech areas of strategic interest where investors have more confidence and dont have to worry about gov punishing shareholders with no voting rights by taking away their shares These kinda ideas often seem to originate from a place of revenge or vengeance on someone folks feel is responsible (here its ‘shareholders’) Better to just install more government oversight (instead of more regulation) improve transparency, amend whistleblower laws to prevent retaliations that boeing did, etc. Those are much more important and useful for this country.
- michaelt 2y ago
  The thing is: Imagine there are two planemakers, each has a computer system to record when they removed the door bolts. One company uses it 95% of the time while the other uses it 100% of the time. For the market to assign a different price to those companies, shareholders have to be able to tell which is which. Investors cannot tell. The official reports don't include anything that wasn't officially reported. People who know first-hand have insider information, and are forbidden from trading on it. Shareholders have no power to enter the assembly floor and carry out spot checks. And "independent" auditors like Accenture are even bigger clowns than Boeing themselves.
  - verall 2y ago
    I think that however flawed, capitalism might prevail here. If enough money was on the line, institutional investors might get actual permission to [hire experts to] enter the assembly floor and do spot checks. Not welcoming such a thing would cause a huge stock hit. etc.
    - janalsncm 2y ago
      I’m not sure what we should be waiting for. The time for the free market to fix Boeing and “capitalism” (read: don’t regulate us please) to save the day would have been before Boeing killed 400 people in plane crashes. I get that the idea of self-correcting markets are very appealing. But there are a ton of situations where they don’t work or don’t fix all of the problems they cause. Those situations are under the general umbrella of market failures. This particular market failure would probably be classified as adverse selection or more general information asymmetry.
      - verall 2y ago
        I'm not advocating for less regulation in the slightest. I'm saying that when a corpo breaks laws (don't follow regulations and lie about it), the fines need to substantially hit their shareholders, so that shareholders are generally aligned with following regulations and will demand additional diligence. Otherwise the game will be as it is - commercial aviation is highly regulated, but Boeing is so big that the fines don't matter to them or their owners (i.e. shareholders).
bell-cot 2y ago
> After all, shareholders are essentially powerless in the current system... Not exactly true. And both the institutional shareholders and ultra-rich shareholders have the experience, resources, and connections to police corporate behavior far more tightly than they usually do... But why should they bother policing behavior, when the maximum penalty for malfeasance has been wrist-slaps? (And similar for the banks and bond markets which large corporations rely upon.) Vs. if the major investors knew that major corporate malfeasance could and likely would cost them $billions - they might very quickly grow more active and assertive, the Boards which they elected would not be passive rubber-stampers, and corporate executives would face regular hard scrutiny. But all that would be real work. Vs. hiring lobbyists and schmoozing politicians, to make sure the maximum penalty is "wrist slap", is far easier.
- Analemma_ 2y ago
  > And both the institutional shareholders and ultra-rich shareholders have the experience, resources, and connections to police corporate behavior far more tightly than they usually do... They really don't, at least not in the case of index fund investors like Vanguard and BlackRock. Have you ever read about their operations? They run a very lean ship. The only reason you're able to invest in index funds with 0.005% fees is because they have essentially nobody on staff, at least compared with the number of companies they invest in. They definitely can't do the kind of investigation and policing you're talking about without radically changing their pricing (and if they did do that, a competitor would come in offering to skip the inspections and go back to 0.005% fees, the money would flow there in droves, and we'd be right back where we started. The fundamental issue here is that passive investors don't care and you can't make them care.)
  - bell-cot 2y ago
    Neither Index funds nor ETF's are likely to do the research & oversight stuff themselves, true. But that is quite different that saying that the Indexes & ETF's would for-sure sit on the sidelines if some more-active large shareholders were pushing a credible plan to force better behavior down the throats of a major corporation's C-suite. And the Indexes & EFT's backing such a measure - which effectively costs them 0.00000% to do - would likely prove the critical thumb sign from the Imperial Box.
JohnClark1337 2y ago
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skizm 2y ago

Shareholders have the power to not buy the stock.

black_puppydog 2y ago

The way I read GP's argument, the (yes, very diluted, but real) "oversight" would come from the fact that every shareholder would have to base their bidding price for e.g. Boeing shares on, among other things, the probability of this company being devalued by 51% following a scandal like this. If (and I understand this is a huge "if") this kind of action was more common, you might think twice before investing into any companies that run a serious risk of direct government interaction to protect the public.

teitoklien 2y ago
Might work in a world where only america exists. What you are suggesting will instead lead to a downward spiral of investor confidence in investing in American companies, and letting other world powers dominate in key tech areas of strategic interest where investors have more confidence and dont have to worry about gov punishing shareholders with no voting rights by taking away their shares These kinda ideas often seem to originate from a place of revenge or vengeance on someone folks feel is responsible (here its ‘shareholders’) Better to just install more government oversight (instead of more regulation) improve transparency, amend whistleblower laws to prevent retaliations that boeing did, etc. Those are much more important and useful for this country.
michaelt 2y ago
The thing is: Imagine there are two planemakers, each has a computer system to record when they removed the door bolts. One company uses it 95% of the time while the other uses it 100% of the time. For the market to assign a different price to those companies, shareholders have to be able to tell which is which. Investors cannot tell. The official reports don't include anything that wasn't officially reported. People who know first-hand have insider information, and are forbidden from trading on it. Shareholders have no power to enter the assembly floor and carry out spot checks. And "independent" auditors like Accenture are even bigger clowns than Boeing themselves.
- verall 2y ago
  I think that however flawed, capitalism might prevail here. If enough money was on the line, institutional investors might get actual permission to [hire experts to] enter the assembly floor and do spot checks. Not welcoming such a thing would cause a huge stock hit. etc.
  - janalsncm 2y ago
    I’m not sure what we should be waiting for. The time for the free market to fix Boeing and “capitalism” (read: don’t regulate us please) to save the day would have been before Boeing killed 400 people in plane crashes. I get that the idea of self-correcting markets are very appealing. But there are a ton of situations where they don’t work or don’t fix all of the problems they cause. Those situations are under the general umbrella of market failures. This particular market failure would probably be classified as adverse selection or more general information asymmetry.
    - verall 2y ago
      I'm not advocating for less regulation in the slightest. I'm saying that when a corpo breaks laws (don't follow regulations and lie about it), the fines need to substantially hit their shareholders, so that shareholders are generally aligned with following regulations and will demand additional diligence. Otherwise the game will be as it is - commercial aviation is highly regulated, but Boeing is so big that the fines don't matter to them or their owners (i.e. shareholders).

bell-cot 2y ago

> After all, shareholders are essentially powerless in the current system... Not exactly true. And both the institutional shareholders and ultra-rich shareholders have the experience, resources, and connections to police corporate behavior far more tightly than they usually do... But why should they bother policing behavior, when the maximum penalty for malfeasance has been wrist-slaps? (And similar for the banks and bond markets which large corporations rely upon.) Vs. if the major investors knew that major corporate malfeasance could and likely would cost them $billions - they might very quickly grow more active and assertive, the Boards which they elected would not be passive rubber-stampers, and corporate executives would face regular hard scrutiny. But all that would be real work. Vs. hiring lobbyists and schmoozing politicians, to make sure the maximum penalty is "wrist slap", is far easier.

Analemma_ 2y ago
> And both the institutional shareholders and ultra-rich shareholders have the experience, resources, and connections to police corporate behavior far more tightly than they usually do... They really don't, at least not in the case of index fund investors like Vanguard and BlackRock. Have you ever read about their operations? They run a very lean ship. The only reason you're able to invest in index funds with 0.005% fees is because they have essentially nobody on staff, at least compared with the number of companies they invest in. They definitely can't do the kind of investigation and policing you're talking about without radically changing their pricing (and if they did do that, a competitor would come in offering to skip the inspections and go back to 0.005% fees, the money would flow there in droves, and we'd be right back where we started. The fundamental issue here is that passive investors don't care and you can't make them care.)
- bell-cot 2y ago
  Neither Index funds nor ETF's are likely to do the research & oversight stuff themselves, true. But that is quite different that saying that the Indexes & ETF's would for-sure sit on the sidelines if some more-active large shareholders were pushing a credible plan to force better behavior down the throats of a major corporation's C-suite. And the Indexes & EFT's backing such a measure - which effectively costs them 0.00000% to do - would likely prove the critical thumb sign from the Imperial Box.

JohnClark1337 2y ago

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