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Remember that both Google and Facebook are publicly‐traded transnational corporations that are legally mandated to act in the best interests of their shareholde
by j_baker 13y ago
Remember that both Google and Facebook are publicly‐traded transnational corporations that are legally mandated to act in the best interests of their shareholders.
This is a huge misconception. The idea that corporations should maximize shareholder value above all else is very modern and likely came from Jack Welch. The truth is that there is no enforceable legal mandate for corporations or their officers to maximize profits.
http://blogs.law.harvard.edu/corpgov/2012/06/26/the-shareholder-value-myth/ http://blogs.law.harvard.edu/corpgov/2012/06/26/the-sharehol...
- mindcrime 13y agoThat was an excellent article, thanks for sharing. I'm looking forward to getting a copy of the author's book - it sounds fascinating.
- pkteison 13y agoThat blog is an extremely shallow ad for a book. Is there some new development that invalidates Dodge v Ford Motor? http://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Company http://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Company
- j_baker 13y agoFrom the linked wikipedia article: Dodge is often misread or mistaught as setting a legal rule of shareholder wealth maximization. This was not and is not the law. Shareholder wealth maximization is a standard of conduct for officers and directors, not a legal mandate. The business judgment rule [which was also upheld in this decision] protects many decisions that deviate from this standard. This is one reading of Dodge. If this is all the case is about, however, it isn’t that interesting.