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business roundtable statement on the purpose of a corporation August 19, 2019

Posted by Bradley in : markets, Uncategorized , trackback

The Statement on the Purpose of a Corporation emphasizes stakeholders – all stakeholders and not just shareholders. The announcement states:

Since 1978, Business Roundtable has periodically issued Principles of Corporate Governance. Each version of the document issued since 1997 has endorsed principles of shareholder primacy – that corporations exist principally to serve shareholders. With today’s announcement, the new Statement supersedes previous statements and outlines a modern standard for corporate responsibility.

The announcement of this change makes sense in the current (uncertain) political environment, but what it may mean in practice is unclear. Before the announcement corporations put a lot of effort into seeming to care about corporate social responsibility and esg measures (it is hard to monitor how real any of this is) . After the announcement many shareholders will continue to demand their profits.  

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