3 ms·

they have a fiduciary duty towards shareholders to reduce the cost (and if needed the quality) to the point of maximising profit.

by exe34 2y ago

falcolas 2y ago
Theoretically, they also have a fiduciary duty to remain solvent, to which killing their biggest traffic driver would be highly detrimental.
39896880 2y ago
Please please please stop repeating this meme. It’s not true, and it never has been. https://corpgov.law.harvard.edu/2012/06/26/the-shareholder-value-myth/ https://corpgov.law.harvard.edu/2012/06/26/the-shareholder-v...
- ahmeneeroe-v2 2y ago
  the law may not be this explicit, but I assure you that shareholders are
  - GeekyBear 2y ago
    Google is a special case where most of the shares sold to the public have no voting rights. The founders and early investors got the shares with voting rights, plus non voting shares they could sell to cash in, while retaining their control of the company. > A Summary of Alphabet's Class Structures Class A: Held by a regular investor with regular voting rights (GOOGL) Class B: Held by the founders, with 10 times the voting power of Class A shares Class C: No voting rights, typically held by employees and some Class A stockholders (GOOG) https://www.investopedia.com/ask/answers/052615/whats-difference-between-googles-goog-and-googl-stock-tickers.asp https://www.investopedia.com/ask/answers/052615/whats-differ...
- cosmic_quanta 2y ago
  To be clear, the post you linked does not argue that 'fiduciary duty' ISN'T about shareholder value maximization; rather, that maximizing shareholder value goes beyond short-term thinking
  - comex 2y ago
    The post is a summary of a book. I haven’t read the book, but here is a longer summary of the same book: 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... > State codes (including that of Delaware, the preeminent state for corporate law) similarly allow corporations to be formed for "any lawful business or purpose,” and the corporate charters of big public firms typically also define company purpose in these broad terms. And corporate case law describes directors as fiduciaries who owe duties not only to shareholders but also to the corporate entity itself, and instructs directors to use their powers in “the best interests of the company.” > Serving shareholders’ “best interests” is not the same thing as either maximizing profits, or maximizing shareholder value. [..] > 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.
  - 39896880 2y ago
    “Contrary to what many believe, U.S. corporate law does not impose any enforceable legal duty on corporate directors or executives of public corporations to maximize profits or share price.”
- exe34 2y ago
  You'd have to explain that to the shareholders who choose the board of directors...
throw0101d 2y ago
> they have a fiduciary duty towards shareholders to reduce the cost (and if needed the quality) to the point of maximising profit. This is the Friedman doctrine: * https://en.wikipedia.org/wiki/Friedman_doctrine https://en.wikipedia.org/wiki/Friedman_doctrine It has been popular since the 1970s, but there is plenty of legal precedence that says otherwise: * https://en.wikipedia.org/wiki/Stakeholder_theory https://en.wikipedia.org/wiki/Stakeholder_theory Including recent SCOTUS rulings: > 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. For-profit corporations, with ownership approval, support a wide variety of charitable causes, and it is not at all uncommon for such corporations to further humanitarian and other altruistic objectives. Many examples come readily to mind. So long as its owners agree, a for-profit corporation may take costly pollution-control and energy-conservation measures that go beyond what the law requires. A for-profit corporation that operates facilities in other countries may exceed the requirements of local law regarding working conditions and benefits. If for-profit corporations may pursue such worthy objectives, there is no apparent reason why they may not further religious objectives as well. * https://caselaw.findlaw.com/court/us-supreme-court/13-354.html https://caselaw.findlaw.com/court/us-supreme-court/13-354.ht... * https://supreme.justia.com/cases/federal/us/573/13-354/case.pdf https://supreme.justia.com/cases/federal/us/573/13-354/case.... * https://en.wikipedia.org/wiki/Burwell_v._Hobby_Lobby_Stores,_Inc https://en.wikipedia.org/wiki/Burwell_v._Hobby_Lobby_Stores,.... See also: * https://www.washingtonpost.com/news/wonk/wp/2013/09/09/how-the-cult-of-shareholder-value-wrecked-american-business/?wprss=rss_ezra-klein&clsrd=&utm_source=dlvr.it&utm_medium=twitter https://www.washingtonpost.com/news/wonk/wp/2013/09/09/how-t... The late Lynn Stout wrote an entire book on the myth: * https://corpgov.law.harvard.edu/2012/06/26/the-shareholder-value-myth/ https://corpgov.law.harvard.edu/2012/06/26/the-shareholder-v... * https://scholarship.law.cornell.edu/cgi/viewcontent.cgi?article=2311&context=facpub https://scholarship.law.cornell.edu/cgi/viewcontent.cgi?arti... * https://evonomics.com/maximizing-shareholder-value-dumbest-idea/ https://evonomics.com/maximizing-shareholder-value-dumbest-i... * https://en.wikipedia.org/wiki/Lynn_A._Stout https://en.wikipedia.org/wiki/Lynn_A._Stout

they have a fiduciary duty towards shareholders to reduce the cost (and if needed the quality) to the point of maximising profit.

by exe34 2y ago

they have a fiduciary duty towards shareholders to reduce the cost (and if needed the quality) to the point of maximising profit.

falcolas 2y ago

Theoretically, they also have a fiduciary duty to remain solvent, to which killing their biggest traffic driver would be highly detrimental.

39896880 2y ago

Please please please stop repeating this meme. It’s not true, and it never has been. https://corpgov.law.harvard.edu/2012/06/26/the-shareholder-value-myth/ https://corpgov.law.harvard.edu/2012/06/26/the-shareholder-v...

ahmeneeroe-v2 2y ago
the law may not be this explicit, but I assure you that shareholders are
- GeekyBear 2y ago
  Google is a special case where most of the shares sold to the public have no voting rights. The founders and early investors got the shares with voting rights, plus non voting shares they could sell to cash in, while retaining their control of the company. > A Summary of Alphabet's Class Structures Class A: Held by a regular investor with regular voting rights (GOOGL) Class B: Held by the founders, with 10 times the voting power of Class A shares Class C: No voting rights, typically held by employees and some Class A stockholders (GOOG) https://www.investopedia.com/ask/answers/052615/whats-difference-between-googles-goog-and-googl-stock-tickers.asp https://www.investopedia.com/ask/answers/052615/whats-differ...
cosmic_quanta 2y ago
To be clear, the post you linked does not argue that 'fiduciary duty' ISN'T about shareholder value maximization; rather, that maximizing shareholder value goes beyond short-term thinking
- comex 2y ago
  The post is a summary of a book. I haven’t read the book, but here is a longer summary of the same book: 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... > State codes (including that of Delaware, the preeminent state for corporate law) similarly allow corporations to be formed for "any lawful business or purpose,” and the corporate charters of big public firms typically also define company purpose in these broad terms. And corporate case law describes directors as fiduciaries who owe duties not only to shareholders but also to the corporate entity itself, and instructs directors to use their powers in “the best interests of the company.” > Serving shareholders’ “best interests” is not the same thing as either maximizing profits, or maximizing shareholder value. [..] > 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.
- 39896880 2y ago
  “Contrary to what many believe, U.S. corporate law does not impose any enforceable legal duty on corporate directors or executives of public corporations to maximize profits or share price.”
exe34 2y ago
You'd have to explain that to the shareholders who choose the board of directors...

throw0101d 2y ago

> they have a fiduciary duty towards shareholders to reduce the cost (and if needed the quality) to the point of maximising profit. This is the Friedman doctrine: * https://en.wikipedia.org/wiki/Friedman_doctrine https://en.wikipedia.org/wiki/Friedman_doctrine It has been popular since the 1970s, but there is plenty of legal precedence that says otherwise: * https://en.wikipedia.org/wiki/Stakeholder_theory https://en.wikipedia.org/wiki/Stakeholder_theory Including recent SCOTUS rulings: > 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. For-profit corporations, with ownership approval, support a wide variety of charitable causes, and it is not at all uncommon for such corporations to further humanitarian and other altruistic objectives. Many examples come readily to mind. So long as its owners agree, a for-profit corporation may take costly pollution-control and energy-conservation measures that go beyond what the law requires. A for-profit corporation that operates facilities in other countries may exceed the requirements of local law regarding working conditions and benefits. If for-profit corporations may pursue such worthy objectives, there is no apparent reason why they may not further religious objectives as well. * https://caselaw.findlaw.com/court/us-supreme-court/13-354.html https://caselaw.findlaw.com/court/us-supreme-court/13-354.ht... * https://supreme.justia.com/cases/federal/us/573/13-354/case.pdf https://supreme.justia.com/cases/federal/us/573/13-354/case.... * https://en.wikipedia.org/wiki/Burwell_v._Hobby_Lobby_Stores,_Inc https://en.wikipedia.org/wiki/Burwell_v._Hobby_Lobby_Stores,.... See also: * https://www.washingtonpost.com/news/wonk/wp/2013/09/09/how-the-cult-of-shareholder-value-wrecked-american-business/?wprss=rss_ezra-klein&clsrd=&utm_source=dlvr.it&utm_medium=twitter https://www.washingtonpost.com/news/wonk/wp/2013/09/09/how-t... The late Lynn Stout wrote an entire book on the myth: * https://corpgov.law.harvard.edu/2012/06/26/the-shareholder-value-myth/ https://corpgov.law.harvard.edu/2012/06/26/the-shareholder-v... * https://scholarship.law.cornell.edu/cgi/viewcontent.cgi?article=2311&context=facpub https://scholarship.law.cornell.edu/cgi/viewcontent.cgi?arti... * https://evonomics.com/maximizing-shareholder-value-dumbest-idea/ https://evonomics.com/maximizing-shareholder-value-dumbest-i... * https://en.wikipedia.org/wiki/Lynn_A._Stout https://en.wikipedia.org/wiki/Lynn_A._Stout