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Comment by no-dr-onboard | Hacker News Reader

It's almost as though companies should be most concerned with profit and not unproductive virtue based working groups that don't produce shareholder value /shrug.

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I found it fascinating recently (last few years) to try, myself, to consider and challenge that axiom/assumption.

Analogy: though I've always been an atheist, the cultural conditioning is so strong, that in my 20's it took me a LOT of conscious effort to consider the notion that "Religion should not be treated specially" (when it comes to e.g. tax breaks, protection, freedom of speech, etc).

On this too then, I've been strongly conditioned that "company's only prerogative is and should be shareholder value", that it took me a lot of effort to consider it critically, but... it's just a sentence, a statement. It's no more true than we desire it to be.

Or to put it another way - if company's ONLY priority is shareholder value, over consumer interest, employee well-being, external impact, and long term picture... the system is as broken as the more aggressive amongst us have banged the drums it to be.

There is no legal requirement for a company to prioritize or only consider shareholder value when making decisions, and never has been. This idea is a meme but it's a straw man. The law doesn't say that. In fact CEOs have enormous leeway to do whatever they like, even if it's not good for shareholder profits. The accountability mechanism isn't a legal requirement to make shareholders money but the ability of shareholders to appoint a board who will then fire the CEO if they're not doing a good job. But those shareholders can choose the board and the board choose the CEO using whatever criteria they like, including making less profit to prioritize other things.

There is a generalized "duty of care" requirement in most jurisdictions, but it can be and often is interpreted much more widely than a requirement to maximize shareholder returns.

The reason for shareholder value to be the guiding principle for companies is about being clear what an organization is about. There is nothing wrong with a company supporting some nonprofit cause but that should be a distinct legal entity. Productive enterprises should be corporations that endeavor to make money. Social cause organizations should be 501c3 or equivalents and not making products as their primary business. Blurring the lines (C corps getting involved in social activism, nonprofits making lots of money and paying most of it for administrative purposes) causes no end of problems.

Discounting the economic benefits of social stability to the point where you don't expend any effort to mitigate resource wars isn't good business for banks.

It's hard to make profits when you're underwater.

You may be correct that companies should focus on profit, shareholder value. If true then we should want to destroy companies since our planet may depend on it.

No, you just need to set the right incentives. Make harmful behaviour expensive, and the companies will adjust.

won't you hippies shut up and think about the shareholders?

I'd be satisfied with just the first half of this sentence. What they think about the shareholders is entirely irrelevant. Let them do their thing while the company does their own. Distinct entities.

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