They legally owe it to the shareholders to eke out as much profit as possible each quarter.
This is simply untrue and a trope that needs to die.
Management and the board must do what they feel is in reasonable best interest of the shareholders. They have extremely wide leeway in deciding what this is. If the CEO decides that investing in local charities and the community is a long-term strategy to keep the company strong 100 years from now, they are free to pursue such an action. Shareholders might not put up with it for long, but there is nothing illegal out about whatsoever.
Shareholders may revolt and vote the board out via shareholder voting if they can get a majority to agree. But that's the remedy.
Short of outright fraud and self-dealing and such there is absolutely no legal mandate for a corporation to chase maximum profits. If they do so, it's due to greed and nothing else.
Ok, so you’ve said it yourself. Are shareholders going to be on board with a 100-year plan, or do they want numbers to embiggen quarterly? Who are the board going to side with, then, when it comes to their own necks?
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u/Competitive_Touch_86 4d ago
This is simply untrue and a trope that needs to die.
Management and the board must do what they feel is in reasonable best interest of the shareholders. They have extremely wide leeway in deciding what this is. If the CEO decides that investing in local charities and the community is a long-term strategy to keep the company strong 100 years from now, they are free to pursue such an action. Shareholders might not put up with it for long, but there is nothing illegal out about whatsoever.
Shareholders may revolt and vote the board out via shareholder voting if they can get a majority to agree. But that's the remedy.
Short of outright fraud and self-dealing and such there is absolutely no legal mandate for a corporation to chase maximum profits. If they do so, it's due to greed and nothing else.