Over on Crooked Timber, Daniel Davies has uncorked a hell of a rant on the fatuous absurdity of the old saw that "corporate officers have a fiduciary duty to maximize shareholder value." He starts off by pointing out that you could maximize the profits of the company for this quarter by, for example, firing everyone -- but that the next quarter would be pretty dismal. Then he gets into the meat of it, how every conceivable action
can be justified as "maximizing value."
In real life, the business judgement rule protects more or less anything that the Creative Capitalism gang might want businesses to do. Even the paradigm example used by Posner – of a corporate chief executive making charitable donations and specifically saying that they weren’t doing it for PR purposes and that they didn’t run the company in the interests of the shareholders – doesn’t actually necessarily give rise to a situation which would fail the business judgement test, because that’s pretty much the story of Body Shop, and if the only way that a company can secure the services of a talented and energetic cosmetics executive like Anita Roddick is to give away money without regard for shareholders, then that’s in the interests of shareholders. There is, of course, a cottage industry in business school cases and the funnies pages of the Economist in proving that instances of corporate philanthropy are actually in the interests of shareholders in the long term.
What obligation? Maximise what?
And, of course, the long term is a terribly difficult thing to forecast. It would, we can presume, be pretty bad for the S&P500 index if the Antarctic ice cap melted and we all drowned. Conversely, if the continent of Africa were to develop a billion consumers in a first world economy, that would be pretty good for the share prices of most companies on the stock exchange. There is a general long time interest of all humanity in doing good (that’s why it’s called “good”) and corporations and their shareholders do, in fact, share in this general interest of humanity. If you want to argue in any particular case that an act of corporate philanthropy isn’t connected tightly enough to a specific benefit which can be appropriated by the company and that this is wrong, then go for it but don’t expect the courts to agree with you.
John Deere is notorious for arguing that farmers who buy its tractors actually “license” them because Deere still owns the copyright to the tractors’ software; in 2015, the US Copyright Office affirmed that farmers were allowed to jailbreak their tractors to effect repairs and modifications.
Guetzli is Google’s new free/open JPEG compression algorithm, which produces images that are more than a third smaller in terms of byte-size, and the resulting images are consistently rated as more attractive than traditionally compressed JPEGs. It’s something of a web holy grail: much smaller, better-looking files without having to convince people to install a […]
Johannes writes, “Finally! My award-winning nerd culture documentary TRACEROUTE (previously) can be downloaded on Vimeo On Demand. It was quite a challenge to create it, and huge thanks to all the folks who supported me… including, of course, the Boing Boing crew. I hope you consider buying or renting it. And in case you want […]
All the filters in the world won’t save your smartphone pics from a shaky hand. To really step up your mobile photography game, you’ll need some kind of mount to hold it steady. You could buy a smartphone attachment for a conventional camera tripod, but who wants to carry that kind of gear everywhere they […]
The forced transition from analog to digital TV signals was probably met with relative indifference from people with Netflix subscriptions and the “I don’t even own a TV” snoots. But anyone living in the vast swaths of the country that don’t have guaranteed high-speed internet, broadcast TV is a perfectly valid (and 100% free) way […]
When Apple revealed the new MacBook in 2016, one of the biggest issues raised with the notebook’s new design (aside from ire over the slew of new adapters you’d inevitably have to buy) was the removal of one of its most beloved proprietary features, the magnetic charging cable. Thankfully, third-party peripheral makers have taken up […]