5 ms·

Needing to maximize shareholder value is a myth. There is no law that requires you to do that - people like to use the idea as an excuse to do scummy business.

• malfist 7mo ago
  Sure, it's a dubious legal requirement at best. But you try telling people that on an earnings call and watch your valuation plummet because you took a long position and the market wanted a next quarter position. And even if you don't care about selling your stock personally, it does impact your ability to raise funds.
  • elictronic 7mo ago
    Short term investors don’t matter. They are going to pull out and move to the next thing.
• arcticbull 7mo ago
  Depends. In Michigan it is binding precedent, see Dodge v. Ford (1919). Delaware corporations must act in the interests of shareholders.
  • elictronic 7mo ago
    This case was specifically about dividends and long term shareholder value, not quarterly results.
  • rurp 7mo ago
    That's an incredibly vague standard and courts have repeatedly declined to get involved in second guessing management decisions. Aside from outright fraud or negligence executives can claim almost any business related decision is in the interest of shareholders because they have a reasonable expectation that the future benefits outweigh the costs. Judges aren't going to be delving into financial projections and expense reports to override the leaders of a business. A widget company could sponsor a soccer team or whatever and say the costs are worth it. Or that same company could not do that and say it's not worth it. Two opposite decisions that both would count as acting in the interest of shareholders.
    • arcticbull 7mo ago
      > That's an incredibly vague standard and courts have repeatedly declined to get involved Which courts? Corporate law is state-level. Delaware generally has some affordances for long-term strategic decisions.