But shareholders can sue over alleged harm to a corporation. I'm not a lawyer, so I really have no idea what the standard is here. But purely speculatively, I suppose someone could be sued for repeatedly missing obvious profit opportunities because the executives objected to them on ethical or other grounds.
I get the impression, though, that shareholders are more likely to sue for committing an active blunder (like selling off a division for an insanely low price) rather than for missing an opportunity.
There's a list of some famous shareholder actions here: https://www.dandodiary.com/2014/12/articles/shareholders-der...
More charitably, I think what people like quadrangle are really meaning to say is that there is a significant legal framework that very strongly incentivizes and is inspired by the idea that the first obligation of a corporation is to maximize profit. And if that was the point, then I think that's pretty close to the truth.
Sure, you won't be arrested for not maximizing profit, but remaining in business without attempting to put profit first is sufficiently hard that it typically requires special legal protections (as in B corporations).
Apologies again: you were right and I was blinkeredly literal.
I'm saying that there's enough legal premise around the idea that the business is working for profit. The investors buy stock with the premise that the business is aiming to provide a return. If they don't aim for that, they can be accused of not running the business in good faith or of misleading the investors…
I'm not saying there's an absolute legal imperative to maximize profit. I'm saying that investors are given enough legal tools in our bureaucratic world that they really can use the legal system along with other tools to bully companies into focusing on proift above other values.
A company just saying in court, "X would bring more profit, but that wouldn't be as good for the world" isn't going to get a suit dismissed if the suit is based on a bunch of complex legal allegations about the company misleading investors or I don't know what other wide range of possible legal arguments are available…
But for Benefit Corp or similar, investors would have less have legal standing to bring suits based on the companies following the social priorities laid out in their Benefit Corp bylaws etc.
Well, if we agree on that core point - which I think is all the point that wool_gather was trying to make - then that's great! And I think there's no point in the two of us investing any more time in picking over quadrangle's slightly confused reply.
I'm afraid I can't resist pulling on one more little thread, though :-) You've sort of hand-waved "legal or financial trouble" together, but it seems to me that legal consequences are very different from other consequences, in that there has to be a legal basis for legal consequences. "agency theory and the norms of ordinary business" can't condense and resolve themselves into a law: there either is a law on the books or there isn't.
I understand that shareholder lawsuits are a thing that can happen under some circumstances. But if the law doesn't make "not maximizing profit" sufficient grounds, then it doesn't, surely?