Fiduciary Duty Profit Maximization
Comments debate the misconception that corporations and directors have a strict legal fiduciary duty to maximize shareholder profits or value, often citing case law like Dodge v. Ford and legal analyses debunking it.
Activity Over Time
Top Contributors
Keywords
Sample Comments
there is no duty to shareholders to maximise profits.see the references in this post:https://news.ycombinator.com/item?id=16171149
My regular reminder that there is no fiduciary duty to behave unethically. Fiduciary duty is a class of highly specific legal obligations on directors to act attentively and not put their own financial interests above those of shareholders. It is not an obligation to maximise return on investment.Cf. https://news.ycombinator.com/item?id=20776770
No, the fiduciary duty the company has to shareholders is vague in this regard and practically speaking they can define the shareholders interest broadly, for example maximising returns at some indeterminate point in the far future. Shareholders can try to sue over this but almost certainly would lose the suit unless real malfeasance is uncovered. IANAL though.
This is an oft repeated misrepresentation. In the US, case-law shows there is a fiduciary duty to the corporation itself, not the shareholders. And there are no laws or regulations which require the maximization of profits.
Fairly certain he’s referring to Dodge v. Ford Motor Company, where it was established that a company needs to operate in the best interests of shareholders above all else.https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.?wprov=...
> You are required to maximize stockholder valueThis is legal fiction that has no bearing in the kinds of subjects that it often gets brought up in. Simply put, those responsible for a company (e.g. officers of a corporation) have a fiduciary duty towards its owners (e.g. the shareholders), and it means that the owners would have legal recourse against the officers if they were provably pissing money away on things that don't benefit the company at all.That latter part is a high ba
Why would that be illegal? There is nothing illegal about having other priorities than maximizing shareholder value. See https://en.wikipedia.org/wiki/Fiduciary#Fiduciary_duties_und....
> Fiduciary duty enshrines this into law.A common misconception: https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co...
That's a misunderstanding that I see a lot, they do not have a legal duty to maximize returns to shareholders.Not the source I usually use for this but,https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co...
> borderline breach of fiduciary duty.That's not a real thing.http://skeptics.stackexchange.com/questions/8146/are-u-s-com...