this post was submitted on 02 May 2024
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[–] GreyEyedGhost@lemmy.ca 16 points 1 year ago* (last edited 1 year ago) (3 children)

This is a myth. (Moreover, it's an American myth.) People need to stop repeating it.

[–] LeFantome@programming.dev 12 points 1 year ago (1 children)

The linked article does nothing to characterize the “myth” you imply.

The article simply states that corporations have to represent the “best interests” of shareholders, that “shareholder value” is a common proxy, and that “value” can be many things because different shareholders have different values.

So, shareholders can tell companies to have a different mandate. Sure. That does not eliminate the default which is that the mandate is to make money. About the only default caveat is that it needs to be “sustainable” value which gives management flexibility to act with a longer term view when thinking about brand, reputation, supply-chain stability, employee relations, regulatory risks, legal risks, the environment, and other things that may not directly make money or even cost money in the short term.

All that said, if a company decides ( without direction from shareholders ) to reduce profits voluntarily, they should expect shareholder action in the form of non-confidence ( getting voted out of management ) or even legal action.

If shareholders have not communicated other “best interests”, their best interest is maximizing the value of the shares. That is almost always going to translate to maximizing profit.

I am not taking a moral position or preference on any of the above. Let’s just not be dishonest by suggesting that management obligations to maximize shareholder value is a “myth”. It is not.

[–] kent_eh@lemmy.ca 6 points 1 year ago

Let’s just not be dishonest by suggesting that management obligations to maximize shareholder value is a “myth”. It is not.

Sure, in theory the shareholders could buy shares and insist that the company focus on something other than maximizing shareholder profit.

But in the real world, that's so rare as to be effectively non-existent.

[–] slowbyrne@beehaw.org 7 points 1 year ago (1 children)

The core argument is that capitalism pushes for this outcome, which your link actually confirms. I also find it a bit odd to claim that "x is a myth" and link to an opinion piece article as if it's a peer reviewed study.

[–] GreyEyedGhost@lemmy.ca 2 points 1 year ago (1 children)

It's a link to an article about a legal case where the courts specifically stated this was not the case. In the legal realm, that is the equivalent of a peer review. And absolutely, unfettered capitalism pushes towards this outcome. That doesn't make it a legal requirement.

[–] null@slrpnk.net 2 points 1 year ago (1 children)

Who said it was a legal requirement?

[–] GreyEyedGhost@lemmy.ca 0 points 1 year ago (1 children)

They need continuous profit. The CEO swears an oath to shareholders to prioritize profit quarter after quarter ad infinitum.

So root comment did.

[–] null@slrpnk.net 2 points 1 year ago* (last edited 1 year ago) (1 children)

Needs = laws?

They'll oust a CEO who doesn't fill that need. No legal action required.

[–] GreyEyedGhost@lemmy.ca -1 points 1 year ago (1 children)

Ah, I see you read the article. Now we're back at the start and you can continue to go in circles without me.

[–] null@slrpnk.net 2 points 1 year ago

Huh? You claimed that "need" = "law" -- which is clearly nonsense.

That's where we are.

[–] AtariDump@lemmy.world 3 points 1 year ago

They don’t have to, but they do anyway.