4 ms·

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/ http

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...

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...