Current Affairs- Business Roundtable: Purpose of a Corporation, March 19, 2020, 11:00 EDT

DMA Current Affairs. The Purpose of the Corporation hosted by Bob Baker

We have licensed audio/video conferencing software and are going to (try to) hold the Current Affairs meeting over the internet.

As always, you should review the material in advance on the website:

https://dariendma.org/current-affairs-business-roundtable-purpose-of-a-corporation-march-19-2020/

You should keep the post open to follow Bob’s opening remarks.

The meeting will start at 11:00 EDT.

We’ve had some issues with connectivity. It could that the company’s capacity is overwhelmed – many, many people are going on-line or it could be idiosyncrasies with a person’s PC. (There is no chance it is the skill of the user.)

For simple dial in use the following numbers from any phone.

United States: +1 (872) 240-3412
Access Code: 132-263-437

For the intrepid you can try joining on-line. The meeting will open about 10:30. We won’t have time to troubleshoot so if there are technical problems, use the dial in number.

Please join my meeting from your computer, tablet or smartphone.
https://www.gotomeet.me/DMAdarien/currentaffairs

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Business Roundtable—Purpose of a Corporation

Pre- August 2019 Maximize Shareholder Value

Corporate Responsibility per Milton Friedman

1970 essay- Maximize Returns to Shareholder

Friedman’s thesis: Corporations are not to make contributions for

“social causes”, shareholders can choose what to give.

Further- Corporations are to obey all laws and regulations.

If corporations make “contributions”, the directors must

conclude such donations create good will and enhance sales.

Current example: Orvis gives 5% of pretax profits for “environmental

causes”. (Could they give 15%?

Comments from Harvard Law School Forum
Re: Business Roundtable Statement on Corporate Mission

Corporate Directors have a fiduciary duty to act in shareholder interest
Thus, decisions not in shareholder interest are illegal

Actions taken by directors will be presumed to be in shareholder interest or they would not be taken.
Directors must adhere to the law so that new Legislative mandates may promote or presume to benefit other stakeholders, but at a cost to shareholders.

Overall question: To what extent do we desire the government to impose
rules that will decrease business profits in order to strive for other benefits

What does the Business Roundtable expect or hope to change with revised statement of purpose?

Former “purpose”: “Maximize shareholder Value”

New “purpose”: “Act to benefit all stakeholders”

Stakeholders: customers, employees, suppliers, communities, and shareholders

Possible intentions:

Change corporate reporting on selective topics?

Motivate investments into areas not directly in shareholder interest?

Motivate shareholder resolutions on new corporate action

Bring about new government rules on business actions

Potential areas of Government mandates: ESG

(Environment, Social, Government)

Action regarding global warming;