We were told the three main answers to the questions raised in this subject. They are;
- To maximise shareholder wealth,
- Risk,
- Other.
We discussed in whose interest companies are run? My initial thoughts that a company exists for the main purpose of profit for those who own the company. I am a bit naive in that I didn't think the 'owners' could be shareholders of a company. I see them as those 'along for the ride' and shouldn't be overly considered when business decisions are to be taken. Why should they be listened to? They don't run the company and most probably wouldn't have the skills to.
I then remembered about a lawsuit Dodge vs Ford Motor Company. Dodge Brothers sued Ford Motor Company in 1919. The Dodge Brothers argued that Henry Ford owed a duty to the shareholders of Ford Motor Company to operate for the profit of shareholders, not the owners.
This has made me reconsider the importance of shareholders.
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