Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

The Dumbest Idea In The World: Maximizing Shareholder Value

forbes.com

Post reply on HN
Print view View original

81–90 of 139 posts

Re: The Dumbest Idea In The World: Maximizing Shareholder Value

#81

Post by j_baker »

barrkel wrote: post #21
mhartl wrote: post #11

There is only one valid definition of a business purpose: to create a customer. No. The one valid definition of a business purpose is this: A business should do what the owners want it to do. Otherwise, the notion of ownership loses meaning. If the owners want to create lots of customers, they do that. If they would rather have a smaller number of highly profitable customers, they do that. If they want to create a ni…

Incorporation is a privilege granted by society; and property rights are never absolute. What you state is extremely individualistic, but it is unrealistic and naive for the same reason. I understand your exhortation, but it does not amount to an argument. For example, most large companies with broad shareholder bases have no owner interests that you can easily point to; the shareholder base has collective action pro…

Perhaps the grandparent isn't making that great of an argument. But at the same time, I don't see you doing anything but arguing. And yet, I have no idea what you're arguing for. I assume that you're making the case that companies need to be more focused on collective action, but I don't really see any alternative vision compared to the grandparent.

That said, I don't think collectivism and individuality are mutually exclusive. If a company can be individualistic in a way that benefits society, what's the problem? Clearly there need to be some limits to what company owners can get away with. That's why society has laws. But it's especially naive to think that companies can be structures that act solely for the good of society with no benefit to the people that have invested in and work for them. Clearly, there needs to be some level of individualism granted to the people who make a company work. Otherwise, you'll have companies that spend so much time focusing on the good of everyone that they end up delivering for no one.

Re: The Dumbest Idea In The World: Maximizing Shareholder Value

#82

Post by nknight »

beagle3 wrote: post #43
blrgeek wrote: post #23

Earlier quoted context omitted.

The owners can do what they want to do without a business. So why create a business? If the owners just want to have a place to park their money, they can have a trust. If they want to do good in the world they can make a non-profit, or an NGO. The only valid definition of a business purpose - creating customers. If they don't want customers (one, few or many), they shouldn't start a business. http://dictionary.refer…

> If they don't want customers (one, few or many), they shouldn't start a business. Legally, there is no such a thing as a "business". A corporation or LLP exists to limit liability. That's it. "Business" is not well defined in the real world. Is an HFT proprietary trading firm, trading its own money on an anonymous exchange, with no customers or clients, not a business?

> Legally, there is no such a thing as a "business".

The US Internal Revenue Service would probably disagree with you there. If I didn't file Schedule C ("Profit or Loss From Business") every year, I'd be in prison.

> Is an HFT proprietary trading firm, trading its own money on an anonymous exchange, with no customers or clients, not a business?

An HFT with no "customers" is simply an agent of its owners. The only sense in which you could call it a business is that it happens to have the form of an incorporated entity, which many businesses also happen to have the form of. A is part of B, C is part of B, does that mean all As are Cs?

You've latched on to one of the bizarre artifacts of the modern American legal system, not a fundamental principle of business.

Re: The Dumbest Idea In The World: Maximizing Shareholder Value

#83

Post by j_baker »

alexqgb wrote: post #35
barrkel wrote: post #21

Earlier quoted context omitted.

Incorporation is a privilege granted by society; and property rights are never absolute. What you state is extremely individualistic, but it is unrealistic and naive for the same reason. I understand your exhortation, but it does not amount to an argument. For example, most large companies with broad shareholder bases have no owner interests that you can easily point to; the shareholder base has collective action pro…

This is a much more civilized response than my initial reaction, which was "go fuck yourself, mhartl". The reason for that indignation was, as you pointed out, the obvious truth that without society's extension of limited legal liability, there would be no business in the first place - or, at least, not one with the scale and structure of a publicly traded company. And no, society does not grant this liability protec…

This is a strawman. Clearly mhartl is doing something good for society. If his goal in helping society is so that he can build a pool of money he can dive into like Scrooge McDuck, why do you care? Is helping society only good if the person who does a good deed only cares for helping starving orphans and lost puppies?

The only time having self interest is wrong is if that self interest hurts society. What's wrong with furthering your own interest if society benefits in the process?

Re: The Dumbest Idea In The World: Maximizing Shareholder Value

#84

Post by shasta »

quanticle wrote: post #52
shasta wrote: post #37

Earlier quoted context omitted.

Yes. The article frustratingly kept identifying "maximizing shareholder value" as the problem and the naive "delight customers" as the solution. Maximizing shareholder value would be much more closely aligned with society's interests if shareholders had the information needed to distinguish real value being built from a company being strip mined.

You need a second constraint. The shareholders have to care about long-term value. Many institutional shareholders don't care and have no incentives to care about long term value. To them, firms are not long term investments - they are merely symbols moving up and down on a price chart. If your symbol moves down too often, they'll pull money out of your firm, even when those gyrations are being caused by forces compl…

With shared information and rational actors (unrealistic, I know) stock prices should reflect long term expectation, even in the short term.

Re: The Dumbest Idea In The World: Maximizing Shareholder Value

#85

Post by mikeash »

cwp wrote: post #80
mikeash wrote: post #75

Earlier quoted context omitted.

I don't think that murdering your rightful accuser and getting away with it is really what most people mean when they say "honor" these days. Maybe honor did used to be more important, but it's not the same concept, only the same word.

I'm not saying Burr was honourable. I'm saying he cared about being perceived as honourable. As did Hamilton, or he wouldn't have accepted the challenge. Cheney, in contrast, doesn't give a damn what people think, as long as Halliburton keeps getting government contracts. The point is not that people were more virtuous in the past. It's that virtue, or at least the perception of virtue, was considered important in th…

And I'm saying that the perception of "honorable" was obviously very different than what we would consider "honorable" to be today if murdering his accuser and getting away with it improved that perception.

Re: The Dumbest Idea In The World: Maximizing Shareholder Value

#86

Post by mikeash »

forensic wrote: post #79
mikeash wrote: post #75

Earlier quoted context omitted.

I don't think that murdering your rightful accuser and getting away with it is really what most people mean when they say "honor" these days. Maybe honor did used to be more important, but it's not the same concept, only the same word.

It's more accountability than what Dick Cheney faced. The point is that even under primitive social codes like the honour system, public officials faced more accountability than they do now. There is no accountability left whatsoever in ANY social leaders: not business leaders, not industry leaders, not political leaders, not military leaders, not scientific leaders, not legal leaders. ZERO personal accountability. T…

Person A ignores his accuser.

Person B murders his accuser and goes on with life.

How exactly is B more accountability? As far as I know, Dick Cheney hasn't murdered any of his accusers.

Re: The Dumbest Idea In The World: Maximizing Shareholder Value

#87

Post by GrowMap »

What a marvelous discussion because it encourages the inherently self-absorbed to reveal their belief systems which nearly always include the worship of self, money, and power as their only true gods.

I highly recommend they all watch the Canadian Documentary 'The Corporation' which clearly illustrates why corporations ARE like psychopaths - and generally run by people who also meet the definition. The movie is available free online.

Corporations as they currently exist are inherently unethical and unsustainable because by focusing on short term gain and stock values they are destroying the real value they once had.

Either social responsibility and long term goals must be injected back into corporations or they need to be boycotted by everyone with a conscience or ideally have their corporate charters revoked.

Re: The Dumbest Idea In The World: Maximizing Shareholder Value

#88

Post by [deleted] »

sliverstorm wrote: post #18
mhartl wrote: post #11

There is only one valid definition of a business purpose: to create a customer. No. The one valid definition of a business purpose is this: A business should do what the owners want it to do. Otherwise, the notion of ownership loses meaning. If the owners want to create lots of customers, they do that. If they would rather have a smaller number of highly profitable customers, they do that. If they want to create a ni…

Where on earth did you get the ridiculous idea that your business can do what you want it to? [/sarcasm]

[deleted]

Re: The Dumbest Idea In The World: Maximizing Shareholder Value

#89

Post by jacoblyles »

alexqgb wrote: post #35
barrkel wrote: post #21

Earlier quoted context omitted.

Incorporation is a privilege granted by society; and property rights are never absolute. What you state is extremely individualistic, but it is unrealistic and naive for the same reason. I understand your exhortation, but it does not amount to an argument. For example, most large companies with broad shareholder bases have no owner interests that you can easily point to; the shareholder base has collective action pro…

This is a much more civilized response than my initial reaction, which was "go fuck yourself, mhartl". The reason for that indignation was, as you pointed out, the obvious truth that without society's extension of limited legal liability, there would be no business in the first place - or, at least, not one with the scale and structure of a publicly traded company. And no, society does not grant this liability protec…

Who is this "society" you speak of? Am I society? Can I tell businesses what I want them to do?
Post reply on HN