Comment on Why do companies always need to grow?

TheFeatureCreature@lemmy.ca ⁨3⁩ ⁨weeks⁩ ago

• tyler@programming.dev ⁨3⁩ ⁨weeks⁩ ago

  That is a common misconception, very often spread all over the place on Reddit. There is no such requirement.

  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. “Shareholder value,” for one thing, is a vague objective: No single “shareholder value” can exist, because different shareholders have different values. Some are long-term investors planning to hold stock for years or decades; others are short-term speculators.

  nytimes.com/…/corporations-dont-have-to-maximize-…

  caselaw.findlaw.com/court/…/13-354.html

  reddit.com/…/eli5_what_people_mean_by_saying_a_co…

  …stackexchange.com/…/are-u-s-companies-legally-ob…

  …northwestern.edu/…/shareholder-value-purpose-cor…

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  • skulblaka@sh.itjust.works ⁨3⁩ ⁨weeks⁩ ago

    You run into a subtext problem here though.

    Serving shareholders’ “best interests” is not the same thing as either maximizing profits

    Making this argument to shareholders means you’re telling them “I wish to shrink your profits”, no matter what else comes after that comma that’s a non-starter for a CEO. 99% of shareholders don’t give one Kentucky fried fuck about the company, they just want free money. You get between them and their free money and you’re gone, replaced by the next failing-upward ghoul in line on LinkedIn.

    The idea of having a well established, respected and non-abusive company is no longer a reality in America. The stock market is a vehicle for gambling on shareholder feelings. It’s no longer about the company at all, just about how much you can hype up the company to then pass the bag along to someone else.

    Wal-Mart shareholders don’t care if Wal-Mart craters into Hell tomorrow, so long as they get paid dividends and are able to offload their shares at a profit before it dies.

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• vpz@infosec.pub ⁨3⁩ ⁨weeks⁩ ago

  Public companies are also in competition with their peers to attract folks (read enormous investment forms) to buy their stock. So they want their “shareholder value” to be competitive. Shareholder value is at a high level the appreciation of the stock price plus dividends. So public company management is given the goal of increasing shareholder value. Which is the number that must go up. Otherwise those enormous investment firms will buy their competitor’s stock instead.

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