I don't know how things are in European countries, but in the United States, the leadership of publically traded companies have a legal repsonsibility to maximize profits to shareholders - 'fiduciary responsiblity'. This has resulted in corporations that will, given the option, always choose profit over everything else; reputation, product safety, longevity, sustainability, it all gets burned at the stake of short-term profits.
It really got accelerated in the modern era thanks to consulting firms like McKinsey popping up and essentially encouraging this behavior as a way to maximize shareholder value in the short-term. To the point that, in the eyes of many shareholders (especially big conglomerates that manage average citizens' investments, mutual funds and retirement funds and the like), there is no value in anything other than pumping the value as high as possible so they can then sell the stock and buy elsewhere before the crash happens.
It's terrible and awful but makes people money so nothing will change.
They do have a fiduciary duty to shareholders but that doesn’t mean they have to always choose profit. They can easily say we aren’t going to make a shit product because we think a good product will make the business more durable. Or we are going to pay a little more than market because we want our pick of the best employees and want them to be bought in.
Just about the only thing they can’t do is say “we gave $400m away because we just felt like it, we have no plan for how we would recoup that”.
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u/SilverMedal4Life 9h ago
I don't know how things are in European countries, but in the United States, the leadership of publically traded companies have a legal repsonsibility to maximize profits to shareholders - 'fiduciary responsiblity'. This has resulted in corporations that will, given the option, always choose profit over everything else; reputation, product safety, longevity, sustainability, it all gets burned at the stake of short-term profits.
It really got accelerated in the modern era thanks to consulting firms like McKinsey popping up and essentially encouraging this behavior as a way to maximize shareholder value in the short-term. To the point that, in the eyes of many shareholders (especially big conglomerates that manage average citizens' investments, mutual funds and retirement funds and the like), there is no value in anything other than pumping the value as high as possible so they can then sell the stock and buy elsewhere before the crash happens.
It's terrible and awful but makes people money so nothing will change.