Comment by ktm5j
3 days ago
Definitely not a myth, friend. Read this article from Harvard Business School: https://online.hbs.edu/blog/post/fiduciary-duty-to-investors
"Accepting funding from investors puts you in a fiduciary role in which you’re responsible for managing their money and putting their needs above your own"
The reality is "it's complicated". But the strongest form of this - that "companies must maximize profits over ALL over concerns NO MATTER WHAT" is basically a myth. See:
https://en.wikipedia.org/wiki/Shareholder_value
So yeah, "fiduciary duty" is a real thing, but that's not quite the same thing as saying that every single decision has to be focused on nothing but profit maximization.
So you think making bad business decisions is holding up to fiduciary duty? You can't throw money at every problem that you'd like to solve, calling that malice is silly was the point I was trying to make.
> So you think making bad business decisions is holding up to fiduciary duty?
I didn't say anything remotely like that, so I'm going to assume you're not trying to have a good faith discussion here, and decline to participate any further. Have a nice day.
1 reply →
Paying staff to avoid distributing literal malware on your platform is not a bad business decision. And even if it was - yes, bad business decisions are within the scope of fiduciary duty. Have you ever seen someone successfully sued under this clause for making a bad business decision, in your life? Fiduciary duty is more like, you can't take the money and run or pay your nephew a $10,000,000 salary to play ping pong in the office. As long as you're not doing something clearly, intentionally harmful to the business and investors, you're clear.
1 reply →
Neglecting all other ethical duties beside profits is so close to malice it takes ...an, ah, expert, to tell you the differences and how important they are.
And this neglecting all duties besides profits thing is real, it is institutionalized by decisions of investors, by managers hired by investors, by regulators "captured" by investors and so-forth. It is the norm. But that doesn't it's a legal or ethical that a given manager or employee has, at least not currently.
Nothing in that article says you're obligated to maximize profit, and you're not:
> To quote the U.S. Supreme Court opinion in the recent Hobby Lobby case: “Modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not.”
https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co...
Executives are free to pursue near-term profit at the expense of everything else if they choose, and the shareholders are free to replace them if they don't. That's a choice by those executives or shareholders though, not an obligation.
I said it's their biggest priority, not their only priority... solving a problem that doesn't cost money and the solution doesn't make money is bottom of the barrel. Come on guys, be real.
FWIW I totally agree with that. What I (and several others) disagree with is the idea that the concept of fiduciary duty confers an obligation to pursue profit at the expense of all else.
Is there an incentive to do that? Yes, or at least it's obviously quite possible. But is there an obligation? No.
Relative to the comment you were responding to, it sounded like you were defending the idea that an obligation exists.
The distinction matters because if such an obligation did exist it would effectively excuse a lot of bad behavior.
You used the word "obligation", not "priority". That's simply not correct, and it transfers responsibility from the people making these decisions to whatever nebulous system would enforce that "obligation".
If you look at the case law for fiduciary responsibility, then you'll find that executives have a strong obligation against self-dealing (decisions that clearly benefit them at the expense of the shareholder), but not much else. The "business judgment rule" makes it generally lawful for executives to make decisions that you, the shareholders, the judge, or anyone else might consider to be bad business judgment. It couldn't really be otherwise, since the difference between wasteful spending and a wise investment in the company's reputation might be unclear even decades later.
If shareholders disagree with an executive's business judgment, then their remedy is to fire that executive. That remedy has nothing specific to "making money"--the shareholders are just as free to fire a CEO for excessive attention to profit as insufficient.
2 replies →
Where on that page is there anything to indicate that hiring more QA or mods would be so bad as to be considered a breach of fiduciary duty? That seems like a pretty big exaggeration, at best.
This behavior is a matter of incentives, not obligations. No need to apologize for them.
"Fiduciary duty" does not mean "pursue profit to the exclusion of all other considerations".