[kasey_junk]

There is no legal requirement to maximize shareholder value. The very idea is an economic theory popularized by Friedman and his students.

It gained popularity in corporate governance since then but it’s not a legal requirement it’s a shareholder preference. But that preference is violated all the time.

People often cite a 1919 era case from Henry ford because it has a pithy statement but the court in that case explicitly upheld many of the decisions Ford made that violated the principle.

That is, there is no law or precedent that requires corporate officers to only consider shareholders.

[ethbr1]

I was under the impression the application was more akin to 'fiduciary duty provides an executive shield for morally reprehensible corporate choices' rather than 'it provides an ability to sue someone for not following it.'

Legal defense instead of offense. IANAL, correct me please.

[kasey_junk]

I don’t think “morally reprehensible” is a legal standard (but i’m not a lawyer either).

But to the point of this thread, there is no legal requirement that makes it so a boards fiduciary duty is in conflict with broader moral decisions, nor one that requires them to forget about their humanity when applying their duties as corporate officers.

If they are assholes, its because they are assholes, not because they are required to do so by their obligations to the corporation.

[ethbr1]

I mean in the sense that if there's a morally distasteful business choice, but corporate officers pursue it, then are sued, a solid defense is claiming fiduciary duty. To wit, they thought it would make the company money.

[akerl_]

Assuming fiduciary duty didn’t exist, what would the claim be in the lawsuit about morally distasteful business choices?

Generally I’m not aware of any civil claim that would let shareholders sue over bad morals.

[likpok]

Modern shareholder law is definitely a strange business. People have successfully brought suits for a variety of bad-but-not-illegal causes. There were a lot of lawsuits about sexual harassment and climate change, I believe the theory being that “bad thing will make the stock go down, and the company didn’t disclose that they might do the bad thing”. Then more recently a lawsuit against target proceeded (I don’t see whether it’s completed yet) despite target having disclosed the risk (in this case of their DEI activity).

The claim in the suit is notably that the company failed to disclose the behavior, not that they did the behavior (Target notwithstanding), which mostly agrees with your line of questioning.

[tptacek]

Ok, but "Everything is securities fraud" (pace Matt Levine) isn't really what we're talking about here. E.I.S.F. cuts against the Chicago School "shareholder value" thing as often as not.