Because we live in a system where paying more for doing the right thing will get fired and sued for lost profits as a CEO. If you run a publicly traded company, you are legally beholden to make the decision that yields the most profit, full stop.
I don’t know where you live so I can’t quote your local laws to you, but in this age of information you can Google terms and they will present relevant links. You should try it sometime.
Your phrasing was “legally beholden” which suggests to me that a law exists requiring directors and officers to choose the most profitable path. The wikipedia page you linked does not mention any such law. It describes a type of lawsuit that investors can bring against those running the company.
Perhaps they didn’t use the right words. Iirc the correct term is ‘fiduciary duty’. A publicly traded company has a fiduciary duty to create value for shareholders.
The duties of some fiduciaries have been codified, for example, the statutory duty of skill and care which is imposed upon trustees by section 1 of the Trustee Act 2000 (TrA 2000) and the relationship between company directors and the company under the Companies Act 2006
They are only legally beholden to do what their shareholders collectively want. While it’s not necessarily just for profit, if the shareholders are only demanding more profits, that’s how the company will behave.
Because we live in a system where paying more for doing the right thing will get fired and sued for lost profits as a CEO. If you run a publicly traded company, you are legally beholden to make the decision that yields the most profit, full stop.
I keep seeing people regurgitate this nonsense.
Source or gtfo.
There will be no sources provided because there are no sources to prove it.
Bro are you dumb
I’m as cynical as anybody else and there was a time I also would have repeated it as well.
But… show me the law. Show me where it says this.
https://en.m.wikipedia.org/wiki/Derivative_suit
I don’t know where you live so I can’t quote your local laws to you, but in this age of information you can Google terms and they will present relevant links. You should try it sometime.
Your phrasing was “legally beholden” which suggests to me that a law exists requiring directors and officers to choose the most profitable path. The wikipedia page you linked does not mention any such law. It describes a type of lawsuit that investors can bring against those running the company.
Perhaps they didn’t use the right words. Iirc the correct term is ‘fiduciary duty’. A publicly traded company has a fiduciary duty to create value for shareholders.
https://www.lexisnexis.co.uk/legal/guidance/fiduciary-duties
They are only legally beholden to do what their shareholders collectively want. While it’s not necessarily just for profit, if the shareholders are only demanding more profits, that’s how the company will behave.