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Is there a legal definition? I thought it was a free market and companies will do whatever they deem necessary to "bring value to their shareholders". For exam
by nottorp 2y ago
Is there a legal definition? I thought it was a free market and companies will do whatever they deem necessary to "bring value to their shareholders".
For example, they used to pay dividends instead of growing indefinitely. Remember that?
- whythre 2y agoYou are right, ‘legal definition’ isn’t right, but the legal doctrine derives from the Michigan Supreme Court’s ruling in Dodge vs Ford Motor co. “Dodge v. Ford Motor Co., 204 Mich 459; 170 NW 668 (1919), is a case in which the Michigan Supreme Court held that Henry Ford had to operate the Ford Motor Company in the interests of its shareholders, rather than in a manner for the benefit of his employees or customers.” This has been often sited as the beginning of ‘shareholder primacy,’ which has become parodied into the particularly stupid (if often accurate) meme of ‘line must go up.’