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Statement on the Purpose of a Corporation

businessroundtable.org

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Re: Statement on the Purpose of a Corporation

#141

Post by skybrian »

bdamm wrote: post #75
skybrian wrote: post #54

Earlier quoted context omitted.

This supposed legal requirement is a myth. Managers have a lot of leeway in how to justify their decisions as somehow related to corporate interests. The company lawyers are not going around warning managers that if they don't pursue shareholder value, they are putting the company at legal risk. It's not something regulators care about. Company training courses warn employees not to do various illegal things that cou…

The statement is great, and meaningful. Hopefully it's a shot of ethics into a somewhat moribund patient. However there are competitive forces also at play. A company that doesn't boost it's stock price as much as its competitor is at a competitive disadvantage because now it has access to less capital. If we're really lucky, someone has found a way to objectively value the goodwill generated by taking good care of t…

It seems like you're approaching this as if businesses are maximizing a function, and that doesn't seem to be how managers make decisions in most places? Competition is important but there are a wide variety of strategies and they are already weighing intangible tradeoffs without necessarily quantifying everything.

Re: Statement on the Purpose of a Corporation

#142

Post by stale2002 »

dougmwne wrote: post #34

...it is a tale Told by an idiot, full of sound and fury, Signifying nothing. Public corporations are not going to stop being paperclip maximizers until we legally and economically force them to stop. This is absolutely nothing but an attempt to divert public anger away from any new regulation that would force companies to deliver more value to society and less to shareholders. Sadly, no different than greenwashing.

No legal changes are needed. Companies are controlled by the shareholders.

Shareholders can, at any time, decide to replace the CEO with someone who will "do good" or whatever.

So if people want to change a company, what they have to do is simple. Buy out the shares, and get majority control, and then make whatever changes that they want.

Re: Statement on the Purpose of a Corporation

#143

Post by cryoshon »

cs702 wrote: post #17

This new purpose stated by the CEOs of America's largest corporations is a welcome change to the corporate ethos that has prevailed in the US since the "greed is good" days of the 1980's. It is also a preemptive response to the growing popularity of politicians like Bernie Sanders and Elizabeth Warren.

it's way too late.

the time for this was back in 2011, when the populist politics were first rearing their head on a national scale. now, it reads like a belated non-apology for past maliciousness. and it won't save them from the rising tide.

Re: Statement on the Purpose of a Corporation

#144

Post by vikramkr »

whatshisface wrote: post #78
ohthehugemanate wrote: post #71

Earlier quoted context omitted.

> Don't give me aspirational pie in the sky. Give me operational policy. See, there are three layers of decision making: vision, strategy, and tactics. You set large aspirational goals first (eg Microsoft "empower every person and organization on the planet to achieve more"), then smaller component strategies ("build the a cloud provider that integrates business intelligence into everything you do"), then the concret…

Why would all of these CEOs from random companies even be in the same room? In a free market leadership doesn't exist that high, companies aren't supposed to coordinate at that level.

In a truly free market, companies aren't supposed to do anything and are more than free enough to coordinate at any level they want if it is beneficial to them with the only checks on coordination and all being game theory situations about the value of the profits that come from breaking away from and undercutting the cartel versus the ensuing loss of profits from the price war or from "punishment" by other cartel members. In a regulated market though, sure, companies aren't supposed to coordinate at that level in ways that violate the law, but this doesn't violate the law.

Re: Statement on the Purpose of a Corporation

#145

Post by cestith »

This has been a long time coming. Short term profits as the only goal has been destroying the market rather than serving it. It's time to make lasting investments in pooling capital, human ingenuity, and goodwill to build corporations that can stand the test of time.

It remains to be seen how seriously this will be taken and how closely companies will follow it. However, giving any benefit of the doubt makes this likely the best news we'll hear about anything for some time.

Re: Statement on the Purpose of a Corporation

#146

Post by vikramkr »

Ididntdothis wrote: post #65
vasilipupkin wrote: post #56

Earlier quoted context omitted.

Soviet Union had show trials and U.S. has show letters. The legal purpose of a corporation is to generate returns for shareholders. If training employees and helping customers advances that goal, then corporations should do it. Otherwise - no. Goes without saying that corporations should maximize shareholder value using legal means only.

As far as I know the purpose of a corporation is to conduct lawful business. I don’t believe the law says anything about shareholder returns.

The law definitely doesn't, otherwise it would be illegal to do things like donate to charity as a corporation. If all shareholders get together and vote unanimously to take all the money in the corporation and give it away, then they can totally do that. If the law mandated maximizing shareholder returns then shareholders would no longer be free to instruct the entity they own to do what they want it to if it conflicts with increasing profits

Re: Statement on the Purpose of a Corporation

#147

Post by throwanem »

wiremine wrote: post #23

You can be cynical about this, and a healthy amount of skepticism is warranted given the authorship. That said, it would be interesting (healthy?) to discuss/debate the merits of the actual statements: * Delivering value to our customers. We will further the tradition of American companies leading the way in meeting or exceeding customer expectations. * Investing in our employees. This starts with compensating them f…

Oh, it all sounds fine, but why wouldn't it? The foxes always make a compelling case for why they're the ones to guard the henhouse.

Re: Statement on the Purpose of a Corporation

#148

Post by jsymolon »

pdonis wrote: post #128
pmiller2 wrote: post #125

Earlier quoted context omitted.

> They don't do what is profitable over long time scales like 30 or 50 or 100 years. We’re facing down the imminent collapse of civilization due to climate change on a 30-50 year scale. Does it even make sense to consider the long term anymore?

> We’re facing down the imminent collapse of civilization due to climate change on a 30-50 year scale. No, we're not. We have lots of ways to adapt, just as humans have adapted to climate change in the past.

Look up the "Little Ice Age" and the "Great Famine of 1315–1317"

Then consider what adapting to climate change could mean.

Re: Statement on the Purpose of a Corporation

#149

Post by excursionist »

mempko wrote: post #49
wiremine wrote: post #23

You can be cynical about this, and a healthy amount of skepticism is warranted given the authorship. That said, it would be interesting (healthy?) to discuss/debate the merits of the actual statements: * Delivering value to our customers. We will further the tradition of American companies leading the way in meeting or exceeding customer expectations. * Investing in our employees. This starts with compensating them f…

This statement was more of a signal to the American people. It's up to us to vote and make the policy decisions to make this possible. As Noam Chomsky often says, even if a CEO wanted to do the right thing, they can't because of the structural constraints. They would be fired so fast. So it's up to us to change those constraints.

That's not quite what Chomsky says...

> The concentration of wealth and enhancement of corporate power translate automatically to decline of democracy. Research in academic political science has revealed that a large majority of voters are literally disenfranchised, in that their own representatives pay no attention to their wishes but listen to the voices of the donor class. It is furthermore well established that elections are pretty much bought: electability, hence policy, is predictable with remarkable precision from the single variable of campaign spending, both for the executive and Congress.

https://truthout.org/articles/noam-chomsky-moral-depravity-d...

Most Americans are politically disenfranchised and political decisions are often made counter to what the majority want and vote for, in favour of elite and corporate interests.

It's pretty amazing to claim corporations are signalling some kind of unity and/or support of the general public based on this PR piece, while their money, lobbying, and power are doing the exact opposite.

Re: Statement on the Purpose of a Corporation

#150

Post by defterGoose »

cryoshon wrote: post #143
cs702 wrote: post #17

This new purpose stated by the CEOs of America's largest corporations is a welcome change to the corporate ethos that has prevailed in the US since the "greed is good" days of the 1980's. It is also a preemptive response to the growing popularity of politicians like Bernie Sanders and Elizabeth Warren.

it's way too late. the time for this was back in 2011, when the populist politics were first rearing their head on a national scale. now, it reads like a belated non-apology for past maliciousness. and it won't save them from the rising tide.

I think the phrase "crocodile tears" was developed specifically for situations like this. Viva la revolucion.
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