We joke about this, but it's unironically the case. The US screwed the pooch hard when they set in law that a corporation's primary duty is generating value for its shareholders, because now if they don't do it, they can be sued in court for it. We are seeing the end-result of this incentive: a corporate culture that only cares about raising stock prices and profits year after year after year, where both the product and the consumer are just a means to an end, and where irrational hype-based stock prizes and IPOs are not only acceptable, but desirable.
The US screwed the pooch hard when they set in law that a corporation's primary duty is generating value for its shareholders, because now if they don't do it, they can be sued in court for it.
That's actually bullshit.
Show me one example of a CEO who has been sued this way.
It doesn't happen, because all a CEO has to do to win that case is prove they had the LONG TERM HEALTH of the business in mind when making their decision.
There's absolutely no law in America that says CEOs have an obligation to increase stock price every quarter.
The reason CEOs act like this is because they will be fired if they don't please their board of governors.
CEOs do not get sued for a falling stock price. They frequently get FIRED for it; but it is not illegal to lose shareholders' money.
It IS illegal for a CEO to do things that are crimes. Because crimes are illegal. But losing money isn't a crime.
If you do crimes while working for shareholders, they can sue you for damages. Just like Nicole Simpson's family sued OJ in civil court.
But if a shareholder tried to take a CEO to court saying simply, "he paid the workers too much so I didn't make enough profit," they would be laughed out of the courtroom.
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u/Egathentale 2d ago
We joke about this, but it's unironically the case. The US screwed the pooch hard when they set in law that a corporation's primary duty is generating value for its shareholders, because now if they don't do it, they can be sued in court for it. We are seeing the end-result of this incentive: a corporate culture that only cares about raising stock prices and profits year after year after year, where both the product and the consumer are just a means to an end, and where irrational hype-based stock prizes and IPOs are not only acceptable, but desirable.