Comment by balozi
9 years ago
I would really like to know which school produced the idea that maximizing shareholder returns IS NOT the primary imperative of any commercial enterprise.
Note the vast majority of corporations are not public and their only shareholders are the individual owners. So, maximizing return on their capital and labor is not based on some "mistaken belief", it is a basic existential requirement. Show me someone that doesn't understand that and I'll show you someone that has never run a business.
I had the words "legally obligated" in there on purpose, to try to avoid a pointless ideological argument in favor of objective fact. And on that point, the Supreme Court says you're wrong: https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co...
How about Luigi Zingales, professor of finance at the University of Chicago Booth School of Business and a former president of the American Finance Association.
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3004794
> So, maximizing return on their capital and labor is not based on some "mistaken belief", it is a basic existential requirement.
That is wrong. The existential requirement is to not lose more money over the lifetime of the corporation than the capital.