Re:U.S. economy shrank at a 1.4% annual rate in the first qu...
by jfengel on Thursday April 28, 2022 @02:28PM
(#31196300)
The company's board is appointed by its shareholders. The shareholders care, so the board cares. And the board hires the executives, so the executives care.
You don't actually need a separate "fiduciary duty". It comes from the shareholders themselves. If the shareholders are happy with a company has motivations other than maximizing profit, they can.
There's even a legal category for that: Public Benefit Corporation. Some of them are publicly traded -- like Warby Parker. Public Benefit Corporations are somewhat protected from shareholders forcing them to pursue profits, which will hurt the stock price, but investors can value the stock based on the benefit they perceive the company to be doing. (Like Warby Parker giving away free glasses to poor people.)
For regular companies, the executives try to make the line go up because if they don't, they'll lose their jobs.
You don't actually need a separate "fiduciary duty". It comes from the shareholders themselves. If the shareholders are happy with a company has motivations other than maximizing profit, they can.
There's even a legal category for that: Public Benefit Corporation. Some of them are publicly traded -- like Warby Parker. Public Benefit Corporations are somewhat protected from shareholders forcing them to pursue profits, which will hurt the stock price, but investors can value the stock based on the benefit they perceive the company to be doing. (Like Warby Parker giving away free glasses to poor people.)
For regular companies, the executives try to make the line go up because if they don't, they'll lose their jobs.