Given that this bunch of clowns call themselves strict constructionists the right wing of the SCOTUS's pro-corporate attitude is both baffling and infuriating, particularly since several of the actual framers we dubious about the personhood of corporations precisely because of the accountability issue.
If companies expect that once they're big, they can take on irresponsible risk without actually being at risk, that encourages them to do so as long as there's short term profit in it.
This is an issue regardless of the size of the company - in smaller firms it simply occurs in the form of siphoning profits off as quickly as possible, while leaving the lenders and stockholders holding the bag if the company fails.
If they can't expect that, boards would be more likely to stop such behavior even if it's profitable.
Unlikely, at best, since the stock market is a very efficient vehicle for creating an ethical race to the bottom - if companies A and B can generate a 10% return at the risk of socializing some of the losses if they go bust, and companies C and D refuse to go there and so take less risk and generate a 5% return, who's going to be in business when it comes time to pay the paper? Probably A and B will have bought C and D outright. But that too is far afield from the original point.
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momijizukamori
no subject
Date: 2008-09-22 20:18 (UTC)If companies expect that once they're big, they can take on irresponsible risk without actually being at risk, that encourages them to do so as long as there's short term profit in it.
This is an issue regardless of the size of the company - in smaller firms it simply occurs in the form of siphoning profits off as quickly as possible, while leaving the lenders and stockholders holding the bag if the company fails.
If they can't expect that, boards would be more likely to stop such behavior even if it's profitable.
Unlikely, at best, since the stock market is a very efficient vehicle for creating an ethical race to the bottom - if companies A and B can generate a 10% return at the risk of socializing some of the losses if they go bust, and companies C and D refuse to go there and so take less risk and generate a 5% return, who's going to be in business when it comes time to pay the paper? Probably A and B will have bought C and D outright. But that too is far afield from the original point.