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.
More than 8,000,000 people have watched this video of a flashmob choir performing “I Can’t Keep Quiet,” a song by LA musician MILCK, who performed it at Saturday’s Women’s March.
Agent X and Agent Full Stop are a pair of graffiti activists who call themselves Acción Ortográfica Quito: they sneak around the streets of Quito, Ecuador with cans of red spray-paint, correcting the punctuation, grammar and spelling of the city’s prolific graffiti writers, bringing legibility to boasts, professions of love, and political messages.
Section 1201 of the 1998 Digital Millennium Copyright Act makes it both a crime and a civil offense to tamper with software locks that control access to copyrighted works — more commonly known as “Digital Rights Management” or DRM. As the number of products with software in them has exploded, the manufacturers of these products […]
You know as well as I that writing complex, long-long form text requires significant organization. You’re probably also well aware that Word just isn’t up to the task. That’s why I’m a huge fan of Scrivener, the software suite used by best-selling authors and technical writers alike.Scrivener is much more than another digital typewriter. With a […]
Looking to upgrade your weekend? Here are three randomly awesome products on my mind this week.#3 FRESHeBUDS Pro Magnetic Bluetooth EarbudsAs more and more phones and gadgets switch to Bluetooth-only compatibility, you’ll need to get Bluetooth headphones like the rest of us. I’ve been super impressed with these affordable magnetic headphones. Pull the magnetic earbuds apart to auto-connect […]
Traditional folding wallets are designed for paper bills—but these days, carrying cash is rarely a necessity. More often than not, I don’t carry cash at all. This Bogui Clik Wallet is the best answer I’ve found for avoiding the hassle of those tight-fitting credit card pockets.This attractive, minimalist wallet features a protective lip, so my cards don’t […]