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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

#41

Post by acjohnson55 »

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…

"Dealing fairly and ethically with our suppliers" omits the responsibility to choose suppliers ethically, as well. The supply chain creates plausible deniability for negative externalities for the consumer, the business they directly interact with, and middlemen down the supply chain. This is one of the biggest problems of global capitalism, today. There's very little accountability.

Re: Statement on the Purpose of a Corporation

#42

Post by danans »

> We commit to deliver value to all of them, for the future success of our companies, our communities and our country.

Without regulation, what is the mechanism to ensure that they comply? Public shaming? Survivor guilt?

Instead, how about bringing the stakeholders (starting with non-managerial-employee representatives) for these objectives onto the boards of directors?

Re: Statement on the Purpose of a Corporation

#43

Post by mandelbrotwurst »

ComputerGuru wrote: post #22
batmenace wrote: post #12

Earlier quoted context omitted.

To be fair, I still feel like it all depends on the company's definition of value. There is an interesting book on Financial Analysis by McKinsey, in which two of the firm's partners write in the foreword that the maximisation of shareholder value should always take into account long term thinking, and as such has to consider the deeper effect of a company's action. In that argument, then, a company isn't truly maxim…

Does a corporation’s own definition of value really matter if it’s publicly listed? It seems to me that if it is listed on the market then there is an implicit “exchange rate” between whatever definition the company chooses and the US dollar (or whatever currency the exchange uses), as anyone can buy into the company with the latter, regardless of how the company chooses to value itself.

Yes. The argument is that even if executives are legally bound to maximize shareholder value and nothing else, that they are not in violation as long as they do that, and that this does not necessarily imply that they need maximize the dollar value of shares because there are other types of value that matter to shareholders (e.g. whether the corporation's outputs kill all humans, etc).

That said, an executive taking this approach would be taking on some risk with this approach as it's, er, not exactly guaranteed that a court would see things this way.

The fact that corporations happen to use dollars as a medium of exchange for shares of their ownership is a separate issue and not really relevant to the question of whether "shareholder value" can include non-monetary outputs.

Illustrating this point, I can imagine an organization designed to maximize the amount of tacos sent to its shareholders, and that manages the sale of its shares in donuts.

Re: Statement on the Purpose of a Corporation

#44

Post by jonwachob91 »

>>> “This new statement better reflects the way corporations can and should operate today,” added Alex Gorsky, Chairman of the Board and Chief Executive Officer of Johnson & Johnson and Chair of the Business Roundtable Corporate Governance Committee. “It affirms the essential role corporations can play in improving our society when CEOs are truly committed to meeting the needs of all stakeholders.”

Oh the irony... [0]https://www.forbes.com/sites/rachelsandler/2019/07/12/johnso...

[1] https://www.theguardian.com/us-news/2019/jul/24/opioids-cris...

Re: Statement on the Purpose of a Corporation

#45

Post by dev_dull »

hn_throwaway_99 wrote: post #31
dev_dull wrote: post #28

Corporations are just people, the same as countries are just people. To think that they operate apart from the decisions of their leaders and members is just silly. There aren’t “good” and “bad” corporations. There’s good and bad leaders and members. I feel like there’s a strong shift happening in the US away from personal affect and responsibility and shifting it into legislative and corporate policies. The self is…

If corporations are 'just people', then we should be fine getting rid of all of the legal fictions that protect these individual people from the consequences of their actions.

Completely agree.

Re: Statement on the Purpose of a Corporation

#46

Post by 0xDEFC0DE »

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…

>Investing in our employees

This should also mean cutting down on abusive or low-paid contractors, if they exist, and converting them to employees.

Re: Statement on the Purpose of a Corporation

#47

Post by excursionist »

mempko wrote: post #27

People are misunderstanding the purpose of this statement. Everyone is saying it doesn't have legal teeth. This is true. But that's not the point. The point of this statement is to signal to the public, that the wealthy are ready to give them what they want and understand that the inequality is unsustainable. They are prepared to make concessions now and it's up to the public to take them. IMO This is basically a "Go…

I think you are misunderstanding the purpose of this cheap PR move.

Re: Statement on the Purpose of a Corporation

#48

Post by pessimizer »

SantalBlush wrote: post #2

Are they trying to get ahead of government regulation with this? It looks like a declaration of self-regulation to me. If they really intend to switch gears and prioritize other stakeholders, that may require some enforceable agreements among them to prevent competition from causing a race to the bottom, and I wonder if such agreements would be legal.

To me, a company that isn't single-mindedly pursuing profit, including breaking laws that have a quantity (penalties * probability of enforcement) that is small in comparison to the upside of breaking those laws - that's a sign of corruption at the company, not the opposite behavior. It just means that somebody is using the company to direct business to other companies that they have more control over, and are easier to loot.

Governments are supposed to circumscribe the actions of public companies; they're chartered by governments as a tool of governments to accomplish government business. Companies should, within those boundaries, pursue profit for their owners.

Re: Statement on the Purpose of a Corporation

#49

Post by mempko »

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.

Re: Statement on the Purpose of a Corporation

#50

Post by jeffrallen »

pessimizer wrote: post #32
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…

They're incomplete in that all of the statements lack any falsifiable content. They're vapid, nonspecific, and obvious. This is clearly a PR exercise, possibly with the hope of publicly allying with one of the Democratic primary contenders, or a strong potential Trump challenger. Statements about planned obsolescence, disposable plastic packaging, repairability or specific forms of rent seeking are examples of the ki…

Or specific maximum CEO to lowest salary ratio targets.
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