Re:Statement on the Purpose of a Corporation
by ComputerGuru on Monday August 19, 2019 @11:57AM
(#20738875)
Does a corporation’s own definition of value really matter if it’s publicly listed? It seems to me that if it is listed on the market then there is an implicit “exchange rate” between whatever definition the company chooses and the US dollar (or whatever currency the exchange uses), as anyone can buy into the company with the latter, regardless of how the company chooses to value itself.
[ Parent
| on HN ]
Re:Statement on the Purpose of a Corporation
by mandelbrotwurst on Monday August 19, 2019 @12:17PM
(#20739087)
Yes. The argument is that even if executives are legally bound to maximize shareholder value and nothing else, that they are not in violation as long as they do that, and that this does not necessarily imply that they need maximize the dollar value of shares because there are other types of value that matter to shareholders (e.g. whether the corporation's outputs kill all humans, etc).
That said, an executive taking this approach would be taking on some risk with this approach as it's, er, not exactly guaranteed that a court would see things this way.
The fact that corporations happen to use dollars as a medium of exchange for shares of their ownership is a separate issue and not really relevant to the question of whether "shareholder value" can include non-monetary outputs.
Illustrating this point, I can imagine an organization designed to maximize the amount of tacos sent to its shareholders, and that manages the sale of its shares in donuts.