Found 6 comments on HN
wgyn · 2017-05-18 · Original thread
> “There is one and only one social responsibility of business,” the economist Milton Friedman famously wrote in 1962. And that is “to use its resources and engage in activities designed to increase its profits.”

It's strange to me that Friedman is viewed (at least by economists and "business" folk) as a paragon of logical reasoning and empiricism, all the while his views reek so strongly of ideology. There are tons of reasons why the quoted statement might be false whether you're a policy maker (negative externalities) or even the most cold-hearted capitalist (short-term incentives).

Perhaps relatedly, it's actually not true that corporate responsibility to profit is codified in the law. See e.g. https://en.wikipedia.org/wiki/Shlensky_v._Wrigley (discussed further in https://www.amazon.co.uk/Shareholder-Value-Myth-Shareholders...)

ABS · 2014-12-06 · Original thread
My standard reply to these posts:

I highly recommend to just get the book [1], it's written very well and in layman terms but here's an extract taken from a review [2] of the same:

"Stout traces the birth of this “fable” to the “oversized effects of a single outdated and widely misunderstood judicial opinion.” Dodge v. Ford Motor Company was a 1919 decision of the Michigan Supreme Court. The opinion’s status as a meaningful legal precedent on the issue of corporate purpose is tenuous at best. Yet, its facts “are familiar to virtually every student who has taken a course in corporate law.” As Stout has observed in the past, “[t]he case is old, it hails from a state court that plays only a marginal role in the corporate law arena, and it involves a conflict between controlling and minority shareholders” more than an issue of corporate purpose generally. The chapter explains quite well that any idea that corporate law, as a positive matter, affirmatively requires companies to maximize shareholder wealth turns out to be spurious. In fact, none of the three sources of corporate law (internal corporate law, state statutes and judicial opinions) expressly require shareholder primacy as most typically describe it. To the contrary, through the routine application of the business judgment rule, courts regularly provide prophylactic protection for the informed and non-conflicted decisions of corporate boards"

[1] "The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations, and the Public" by Lynn Stout http://www.amazon.co.uk/The-Shareholder-Value-Myth-Sharehold... [2] http://arizonastatelawjournal.org/book-review-the-shareholde...

minimax · 2014-11-12 · Original thread
I'm not a lawyer, but I did just read a book† written by a lawyer†† about this topic. I think it's possible that it can vary state to state, but in Delaware (a very popular place to form corporations) the law††† says:

The business and affairs of every corporation organized under this chapter shall be managed by or under the direction of a board of directors, except as may be otherwise provided in this chapter or in its certificate of incorporation.

http://www.amazon.com/The-Shareholder-Value-Myth-Shareholder...

†† http://www.lawschool.cornell.edu/faculty/bio_lynn_stout.cfm

††† http://delcode.delaware.gov/title8/c001/sc04/index.shtml

ABS · 2014-07-25 · Original thread
Sorry if I copy and paste a comment I left some time ago in another thread ( https://news.ycombinator.com/item?id=7983281 ) but it's relevant:

I highly recommend to just get the book [1], it's written very well and in layman terms but here's an extract taken from a review [2] of the same:

"Stout traces the birth of this “fable” to the “oversized effects of a single outdated and widely misunderstood judicial opinion.” Dodge v. Ford Motor Company was a 1919 decision of the Michigan Supreme Court. The opinion’s status as a meaningful legal precedent on the issue of corporate purpose is tenuous at best. Yet, its facts “are familiar to virtually every student who has taken a course in corporate law.” As Stout has observed in the past, “[t]he case is old, it hails from a state court that plays only a marginal role in the corporate law arena, and it involves a conflict between controlling and minority shareholders” more than an issue of corporate purpose generally. The chapter explains quite well that any idea that corporate law, as a positive matter, affirmatively requires companies to maximize shareholder wealth turns out to be spurious. In fact, none of the three sources of corporate law (internal corporate law, state statutes and judicial opinions) expressly require shareholder primacy as most typically describe it. To the contrary, through the routine application of the business judgment rule, courts regularly provide prophylactic protection for the informed and non-conflicted decisions of corporate boards"

[1] "The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corportations, and the Public" by Lynn Stout http://www.amazon.co.uk/The-Shareholder-Value-Myth-Sharehold...

[2] http://arizonastatelawjournal.org/book-review-the-shareholde...

ABS · 2014-07-03 · Original thread
Reminded of this following the comments to the earlier submission "What Happens When a Healthcare Startup Leaves You With the Bill" https://news.ycombinator.com/item?id=7983281

The actual book is:

"The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corportations, and the Public" by Lynn Stout http://www.amazon.co.uk/The-Shareholder-Value-Myth-Sharehold...

but linking to a review to get an idea.

ABS · 2014-07-03 · Original thread
This myth that businesses have a fiduciary responsibility to maximize profits has to die :-)

Fortunately there is now (since 2012 in fact) a book that explains it very well in terms that almost anyone can understand, certainly anyone here on HN:

The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations, and the Public http://www.amazon.co.uk/Shareholder-Value-Myth-Shareholders-...

Don't even need to read it all, the first few chapters are more than enough IMHO

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