I have repeatedly heard that corporate executives have a fiduciary duty to maximize the value returned to investors. I have also repeatedly heard exactly the opposite: that there is no requirement for executives to try to maximize the value returned to investors.

Do corporate executives have a fiduciary duty to maximize the value returned to investors?

Given that this could possibly vary by region, please specify the region to which your answer applies.

Inspired by this thread on on Physics Meta StackExchange:
and this claim on Meta StackExchange:

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    #1 This might be better on Law.SE. #2 It probably depends on the Corporation's by-laws. (After all, a non-profit corporation can't maximize the value returned to investors.) – RonJohn Jun 12 at 2:31
  • @RonJohn Both good points. I seem to recall we discussed this issue here before, but I can't find that discussion. IIRC, a few people here seemed to be experts on the topic, so I thought it best to post here. But Law SE would be a good place too. If quality answers don't appear here, I'll request migration to Law SE. Thank you for your feedback. – RockPaperLz- Mask it or Casket Jun 12 at 2:37
  • And others have an unwritten duty to just stay in business and provide employment to family (though that's probably fading away). – RonJohn Jun 12 at 2:40
  • @RonJohn I didn't quite understand your second comment you posted a minute ago. Are you referring to some corporations having an unwritten duty to stay in business and provide jobs to a single family? I'm not quite following what you are trying to convey. – RockPaperLz- Mask it or Casket Jun 12 at 2:44
  • It's on a different site, but this question is a duplicate: skeptics.stackexchange.com/questions/8146/… – DJClayworth Jun 12 at 3:07

In the United States, there's an abstract duty act in for the profit of stockholders, but there's no duty to do anything specific. Donations to charity are specifically allowed, for instance. (See AP Smith Manufacturing Co. v. Barlow )

The big, classic case about this is Dodge v. Ford Motor Co., which is one of the only cases where the company executive lost. And that was only because Henry Ford was going around saying he wasn't paying out dividends because he wanted to squeeze his minority shareholders. And the only result of losing the case was that the company was ordered to pay a $19 million special dividend to the shareholders.

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    Thanks for your answer. Would you mind editing the first sentence? I'm trying to understand what you tried to write in the "duty act in for the" section. Also, do you have a reference for the "abstract duty"? Is it something written somewhere? Thanks again. – RockPaperLz- Mask it or Casket Jun 15 at 17:08

It doesn't matter in reality if they are legally required to (maximize it), because the way to maximize it is not strictly defined.
Maximize for the next dividend? Or for the next year? Or for the company's situation in a decade? And how do you maximize the value returned to the investor over the next decade? There is no obvious answer, or we would not need CEOs to start with.

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