6 ms·

We need to set a precedent for holding shareholders accountable. I could go to jail if my dog hurts somebody, it should be no different with a company.

solidsnack9000 25d ago
Shareholders can't be held accountable because they can neither initiate nor prevent actions of the company. That is an essential part of the bargain -- it protects the shareholders from each other and makes public ownership of companies possible. They "own the company" but can't actually go on the premises, use the printer paper, drink the coffee, drive the fleet vehicles, &c. The shareholders give all authority over actions and property of the company to the executives. I believe that one classical way to frame this is that the shareholders have the "beneficial ownership" but not the "legal ownership". Another framing is that shareholders have "ownership" but not "control". People can't be held responsible for things they didn't choose to do, didn't set in motion, didn't plan or enable, &c, &c. There are a lot of people out there who want to make the world a better place. It is really necessary for such people to understand institutions at a moderately deep level -- we can't improve governance if we don't understand the first thing about it.
- __MatrixMan__ 25d ago
  > The shareholders give all authority over actions and property of the company to the executives. Who picks the executives? Who fires them when they misbehave?
  - solidsnack9000 22d ago
    Let's say that, at least in concept, the shareholders individually vote. (Frequently their votes are delegated; in many cases, they even have no vote.) Say shareholders vote for a certain executive, call them Gaius, to be hired. Gaius directs that some AI be developed and the AI does some crimes. 1. Should the shareholders be jailed for what Gaius did? 2. If so, should it be all the shareholders or only the ones who voted for him? What about the ones who didn't vote (not reached by mail in time, &c)? In situations where shareholders have nonvoting shares or only hold shares indirectly (index funds, &c), I think we can both agree that they can not be jailed. Say that the shareholders are not held accountable because they didn't know what Gaius was up to until it was too late. Then there is a vote to fire Gaius. Say the vote fails and Gaius is retained. 3. Should the shareholders be jailed for what Gaius did? 4. If so, should it be all the shareholders or only the ones who voted against the motion? What about the ones who didn't vote (not reached by mail in time, &c)? Say the vote succeeds and Gaius is fired. 5. Should the shareholders be free of accountability? 6. If so, should it be all the shareholders or only the ones who voted against the motion? What about the ones who didn't vote (not reached by mail in time, &c)? However, there is a larger problem or question, here. It is presently legally impossible to hold shareholders accountable for what executives do because it is defined to be that way; but if we changed that, we then have to ask: how do they manage their liability or accountability? Could anyone really do that? The whole point of a corporation is that it limits liability so that people can (a) contribute towards a complex common enterprise with some confidence, not that it will succeed, but that they won't be completely ruined by it (or imprisoned, &c) and (b) contribute towards a large number of common enterprises, to a greater or lesser degree, as much as they like, without having to keep tabs on them. If they can't do (a) or (b), there will be a lot fewer and a lot smaller common enterprises.

solidsnack9000 25d ago

Shareholders can't be held accountable because they can neither initiate nor prevent actions of the company. That is an essential part of the bargain -- it protects the shareholders from each other and makes public ownership of companies possible. They "own the company" but can't actually go on the premises, use the printer paper, drink the coffee, drive the fleet vehicles, &c. The shareholders give all authority over actions and property of the company to the executives. I believe that one classical way to frame this is that the shareholders have the "beneficial ownership" but not the "legal ownership". Another framing is that shareholders have "ownership" but not "control". People can't be held responsible for things they didn't choose to do, didn't set in motion, didn't plan or enable, &c, &c. There are a lot of people out there who want to make the world a better place. It is really necessary for such people to understand institutions at a moderately deep level -- we can't improve governance if we don't understand the first thing about it.

__MatrixMan__ 25d ago
> The shareholders give all authority over actions and property of the company to the executives. Who picks the executives? Who fires them when they misbehave?
- solidsnack9000 22d ago
  Let's say that, at least in concept, the shareholders individually vote. (Frequently their votes are delegated; in many cases, they even have no vote.) Say shareholders vote for a certain executive, call them Gaius, to be hired. Gaius directs that some AI be developed and the AI does some crimes. 1. Should the shareholders be jailed for what Gaius did? 2. If so, should it be all the shareholders or only the ones who voted for him? What about the ones who didn't vote (not reached by mail in time, &c)? In situations where shareholders have nonvoting shares or only hold shares indirectly (index funds, &c), I think we can both agree that they can not be jailed. Say that the shareholders are not held accountable because they didn't know what Gaius was up to until it was too late. Then there is a vote to fire Gaius. Say the vote fails and Gaius is retained. 3. Should the shareholders be jailed for what Gaius did? 4. If so, should it be all the shareholders or only the ones who voted against the motion? What about the ones who didn't vote (not reached by mail in time, &c)? Say the vote succeeds and Gaius is fired. 5. Should the shareholders be free of accountability? 6. If so, should it be all the shareholders or only the ones who voted against the motion? What about the ones who didn't vote (not reached by mail in time, &c)? However, there is a larger problem or question, here. It is presently legally impossible to hold shareholders accountable for what executives do because it is defined to be that way; but if we changed that, we then have to ask: how do they manage their liability or accountability? Could anyone really do that? The whole point of a corporation is that it limits liability so that people can (a) contribute towards a complex common enterprise with some confidence, not that it will succeed, but that they won't be completely ruined by it (or imprisoned, &c) and (b) contribute towards a large number of common enterprises, to a greater or lesser degree, as much as they like, without having to keep tabs on them. If they can't do (a) or (b), there will be a lot fewer and a lot smaller common enterprises.