Yes and no. What I feel you're describing is a Ponzi Scheme. Sure you're maximizing value for the current shareholders, but someone is going to be left holding the bag. What about __those__ shareholders? You're no longer maximizing for them. In fact, if you're not disclosing your plan to slide down and into oblivion then wouldn't that be fraud?

Who decides this is the goal? Do all corporations have this as their ultimate goal?

It is their legal obligation.

https://www.litigationandtrial.com/2010/09/articles/series/s...

Imagine you invested money into some enterprise that promised you a share of the profits it will attempt to gain. If that enterprise never actually attempted to turn a profit, it would effectively be fraud.

Now let's imagine they do give you a share of the profits, but the enterprise spends most of its income on frivolous and unnecessary expenses and therefore the profits are very small, that would still effectively be fraud.

Therefore, the provision is to maximize value. It is the basic responsibility of anyone running a public company. Of course this is all fuzzy and you do have a lot of leeway in justifying expenses/investments, but the principle remains.

> Therefore, the provision is to maximize value. It is the basic responsibility of anyone running a public company. Of course this is all fuzzy and you do have a lot of leeway in justifying expenses/investments, but the principle remains.

And this is where the law can step in. The shareholders can unite and take action. Or the gov can atep in. For example, the state of NY is going after Exxon Mobile for fraud, as related to EM's lack of disclosure over their role in climate change.

This is the standard/traditional theory of business, right? No one person decided it, it's just a theory about a capitalist markets. This theory is cited as one of the main guiding principles in corporate ethics as well.

https://www.accountingtools.com/articles/2019/1/25/sharehold...

Nobody specifically but it's not the wrong goal. Remember that "zombie companies" that don't make sense anymore but the state won't let die is a typical sign of a sclerotic Communist economy. At some point the existence of a company has to be a means not an end, so what is the end? Shareholder value. Because that's what ultimately means a company had positive return on investment and that is the closest signal we have to "doing something useful".

> Remember, preserving the corporation is not the goal; maximizing value to the shareholders is the goal.

Preserving the the company is generally quite important in order to maximize value.

The "maximizing value" provision doesn't imply "in the short term", unless for some reason all the value is only in the short term.

If this wasn't the case, no company could ever invest in anything, because that lowers the short-term value.

Of course in practice the short term is often given preference, but that's not because of the provision.

> Preserving the the company is generally quite important in order to maximize value.

Often it is, but not always. If the market for the company's product is going away it may make sense to just ride things down to the end, milking as much as they can as they die.

Monetizing other value in the company may also be possible, of course. The corporation could be purchased, or its parts could be sold in liquidation. The point is that survival of the corporation is not an end in itself, it's only relevant insofar as its maximizes shareholder value.

If maximizing value to the shareholders is the goal, companies should dissolve and pay out the proceeds as dividends.

That may maximize the immediate value to shareholders, but the real goal is to maximize all discounted future cash flows.

That's not how business works.

- Corporate tax vs. individual tax - Deferred tax assets - Sum-of-the-parts valuations - Internal project NPVs > NPV of investments available to an investor