• December 2019
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Is it true that corporations must place profit before any other concern?

To quote an interesting article published in the New York Times on this topic by Lynn Stout, a Cornell Law School professor:

“The U.S. Supreme Court opinion in the recent Hobby Lobby case stated ‘Modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not.”

The article further states,

“Serving shareholders’ “best interests” is not the same thing as either maximizing profits, or maximizing shareholder value. “Shareholder value,” for one thing, is a vague objective: No single “shareholder value” can exist, because different shareholders have different values. Some are long-term investors planning to hold stock for years or decades; others are short-term speculators.”

Thus it is an overgeneralization to state that profit rules all other concerns. A corporation must only act in the “best interest” of its shareholders what constitutes the “best interests” is a question of context. In some cases shareholders demand a more socially conscious approach in other cases profit (within the law of course) is the main concern.