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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

#161

Post by echelon »

AtlasBarfed wrote: post #13

Wake me up when I can use such a statement as a means to legally coerce corporations into compliance with existing laws, to say nothing of the exigent environmental threats facing the world. Literally every CEO would laugh at this statement in the privacy of their office, while they engineer stock manipulation to trigger their stock options and retire in 5 years. It's like an ethics in business class at MBA schools.…

> Literally every CEO would laugh at this statement in the privacy of their office, while they engineer stock manipulation to trigger their stock options and retire in 5 years.

While this may be true of some, I don't think all CEOs want to stop working. Nor are all of them principally concerned with wealth.

Can you not imagine a CEO driven to satisfy their customers and employees? I can think of several.

Re: Statement on the Purpose of a Corporation

#163

Post by vasilipupkin »

joshuamorton wrote: post #160
vasilipupkin wrote: post #159

Earlier quoted context omitted.

No, if it’s secutities fraud it’s illegal. Unethical and illegal are not the same thing. A corporation cannot do what it wants, but it can do what shareholders want.

> No, if it’s secutities fraud it’s illegal. Right, and acting unethically can be securities fraud. Hence illegal. Even if the unethical thing is on its own not illegal, and in pursuit of higher short term profits. >A corporation cannot do what it wants, but it can do what shareholders want. Yes it can, as long as it makes sure to inform shareholders of what it intends to do. As long as shareholders have information…

You made the claim that corporations must act ethically or its securities fraud. That claim is not correct. Some unethical behavior can indeed be illegal but unethical in itself doesn’t automatically break the law.

As for information, management of the corporation works for the shareholders. If the shareholders don’t like management decisions,they can replace management. So, ultimately the corporation is an entity designed to advance the interests of shareholders.

Re: Statement on the Purpose of a Corporation

#164

Post by vasilipupkin »

my_username_is_ wrote: post #76
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.

>The legal purpose of a corporation is to generate returns for shareholders. >Goes without saying that corporations should maximize shareholder value using legal means only. But why? This line of thinking typically assumes that people start companies strictly to make money--an assumption that I see as patently false. There are plenty of for-profit social enterprises (which is to say nothing of non-profits). For examp…

Well, they could start a non profit with a mission to be self sustaining through business operations. If they didn’t, if they started a regular corporation, we don’t know for sure, but it’s a good guess their goal is to make money.

Re: Statement on the Purpose of a Corporation

#165

Post by joshuamorton »

vasilipupkin wrote: post #163
joshuamorton wrote: post #160

Earlier quoted context omitted.

> No, if it’s secutities fraud it’s illegal. Right, and acting unethically can be securities fraud. Hence illegal. Even if the unethical thing is on its own not illegal, and in pursuit of higher short term profits. >A corporation cannot do what it wants, but it can do what shareholders want. Yes it can, as long as it makes sure to inform shareholders of what it intends to do. As long as shareholders have information…

You made the claim that corporations must act ethically or its securities fraud. That claim is not correct. Some unethical behavior can indeed be illegal but unethical in itself doesn’t automatically break the law. As for information, management of the corporation works for the shareholders. If the shareholders don’t like management decisions,they can replace management. So, ultimately the corporation is an entity de…

> You made the claim that corporations must act ethically or its securities fraud. That claim is not correct. Some unethical behavior can indeed be illegal but unethical in itself doesn’t automatically break the law.

Not exactly no, I made the claim that a lot of unethical, but not directly illegal, behavior has been successfully called securities fraud.

> So, ultimately the corporation is an entity designed to advance the interests of shareholders.

Which is not the same as "generating returns for shareholders". Of course this also gets even more confusing with voting/non-voting shares, where for the majority of shareholders, your interests don't matter at all.

Re: Statement on the Purpose of a Corporation

#166

Post by raygelogic »

this is significant when you consider historical context. this was a common view held in the 50s, but over time, maximizing shareholder value over all stakeholder value became the dominant concern. it's good to see the intent swinging back. sure, it's just words right now. when we see worker salaries grow to take up a larger piece of the pie, we'll know they mean it.

Re: Statement on the Purpose of a Corporation

#167

Post by pdonis »

pmiller2 wrote: post #157
pdonis wrote: post #128

Earlier quoted context omitted.

> 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.

That’s the kind of short sighted thinking that’s going to kill most of us. I say most, because, while I expect humanity will adapt, civilization as we know it may not.

> That’s the kind of short sighted thinking that’s going to kill most of us.

No, the kind of short sighted thinking that might cause civilization to collapse is trumpeting gloom and doom based on inadequate knowledge and failed predictions. The climate models on which the alarmist hype is based have been falsified by the data. And nobody even has predictive models for economics on that time scale.

Re: Statement on the Purpose of a Corporation

#168

Post by vasilipupkin »

joshuamorton wrote: post #165
vasilipupkin wrote: post #163

Earlier quoted context omitted.

You made the claim that corporations must act ethically or its securities fraud. That claim is not correct. Some unethical behavior can indeed be illegal but unethical in itself doesn’t automatically break the law. As for information, management of the corporation works for the shareholders. If the shareholders don’t like management decisions,they can replace management. So, ultimately the corporation is an entity de…

> You made the claim that corporations must act ethically or its securities fraud. That claim is not correct. Some unethical behavior can indeed be illegal but unethical in itself doesn’t automatically break the law. Not exactly no, I made the claim that a lot of unethical, but not directly illegal, behavior has been successfully called securities fraud. > So, ultimately the corporation is an entity designed to advan…

We can dance around semantics, the point is corporations cannot do things that shareholders collectively find as bad for them. For example, corporations cannot benefit employees at the expense of shareholders. If management decided to write a big fat check to employees and shareholders didn’t agree, they can call an emergency meeting cancel the check, fire management and appoint new management.

Re: Statement on the Purpose of a Corporation

#169

Post by pdonis »

jsymolon wrote: post #148
pdonis wrote: post #128

Earlier quoted context omitted.

> 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.

Which means we should be spending resources on making our society more robust: getting more people out of poverty and making our infrastructure more resilient. That will make it easier for people to adapt as compared with those previous times when virtually everyone on the planet was poor and there was no infrastructure at all to speak of.

But climate change alarmists aren't telling us to do that; they're telling us to take all the resources we could be spending on those good things, and instead squander them on draconian efforts to curb CO2 emissions based on models that have been falsified by the data.

Re: Statement on the Purpose of a Corporation

#170

Post by anticensor »

OscarCunningham wrote: post #63
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…

In a circumstance where bosses are forced to tradeoff between these goals, how should they choose?

Preservation of company (including the ownership structure and charters) > Profit (overall from institution to dissolution) > Other benefits
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