https://en.m.wikipedia.org/wiki/Salomon_v_A_Salomon_%26_Co_L...
Shareholders own and run the company. A majority of shareholders can effectively do anything they want with it, it's theirs.
That a corporation may possibly exist independently is a corner case.
It doesn't matter, the logic of the article is twisted.
It implies that profits can be used by the board of directors for whatever reason, obviously. But that board is elected by shareholders to carry out their bidding, and they are a proxy of shareholders, thereby abnegating the logic of the argument.
"The business judgment rule ensures that, contrary to popular belief, the managers of public companies have no enforceable legal duty to maximize shareholder value"
My god man, the board will act in the best interest of the shareholders or ultimately they'll get the boot. If the shareholders are dispersed and can't coordinate themselves, they'll have less power and see more go to the next entity with power, probably the executives.
Change shareholders to voters, executives to elected official, then you have a time tested example of power grab. Checks and balances are important in both cases.
In many companies, merely a handful of entities can make up most of the power, or nearly most of it. Shareholders that matter can usually fit in a room, and have a conversation.
With 300 000 to 1 as we see in politics ... it's a little different.
We can have a debate about 'shareholder primacy' but this is not it.
"Consider first Friedman’s erroneous belief that shareholders “own” corporations. Although laymen sometimes have difficulty understanding the point, corporations are legal entities that own themselves, just as human entities own themselves. What shareholders own are shares, a type of contact between the shareholder and the legal entity that gives shareholders limited legal rights. In this regard, shareholders stand on equal footing with the corporation’s bondholders, suppliers, and employees, all of whom also enter contracts with the firm that give them limited legal rights."
This is essentially rubbish, debt holders, suppliers and employees all have a relationship but they are not the firm. The firm does not exist independently of shareholders.