Quite often a senior leadership issue because backing stuff up results in $$$ spent, which makes shareholders unhappy. And in the US at least, unhappy shareholders means lawsuits since publicly traded companies are legally bound to return growth in share price or dividends.
>Quite often a senior leadership issue because backing stuff up results in $$$ spent, which makes shareholders unhappy.
This is true. The latter half of your comment is not. At best they have a duty to shareholders. But your assertion would mean every time a company posted a loss and the price went down the execs would be in legal trouble, which is nonsense.
Shareholder nuisance lawsuits can happen basically any time the stock goes down... or doesn't go up enough, and often companies will settle instead of the expensive fighting...
There are grounds legally if shareholders can prove that the "long-term risk reduction" argument is a lie, they can sue under the Duty of Loyalty. In reality, yes, this amounts nuisance lawsuits, large settlements and disruption at the board level. In practice, this and the executive pay structures almost always incentivizes short-term decisions and these risks become problems “for the next person.”
This is Matt Levine's theory of "everything is securities fraud".
Something bad happens, stock goes down, angry shareholders sue because they should have been told the bad thing would happen and the stock would go down.
Shareholders? Hmmmm...
https://secform4.com/insider-trading/1018724.htm + https://i.imgur.com/tMBfGee.png = ?
Cue security entitlements, e.g. https://ndlegis.gov/assembly/69-2025/testimony/SJUD-2364-202...
What?! Publicly traded companies are not “legally bound to return growth in share price or dividends.”
There are plenty of companies who pay no dividends and have not returned growth in share price. They’re still operating and no one’s coming to throw the execs in jail.
On the off chance that there is such a law, please cite it.
Not a law perhaps, but an ingrained neoliberal philosophy that is pervasive in certain management cultures in the US definitely.
Neoliberal philosophy is stable ground for a lawsuit?
In a Gramscian understanding of the world it is, yes. Forget Gramsci, right now I'm finishing reading a book by Maurice Gauchet [1] (not a leftist by any means) whos's saying exactly that, i.e. that neo-liberalism is very much defined by its insistence on relying on " le juridique"
> Ce dérèglement se manifeste avant tout par la réduction de la démocratie à une logique juridique, le néolibéralisme ayant imposé une conception où le droit, érigé en garant exclusif de la liberté individuelle, relègue le politique à une fonction purement gestionnaire
automatically translated as
> This dysfunction manifests itself primarily through the reduction of democracy to a legalistic logic, as neoliberalism has imposed a conception in which the law—elevated to the status of exclusive guarantor of individual liberty—relegates the political realm to a purely managerial function.
[1] https://en.wikipedia.org/wiki/Marcel_Gauchet
so a sort of "the law says its okay so how dare you say its immoral. It's my right to do this" sort of thing?
Yeah, that sort of thing, where the law sort of dictates the current morality based on the "morality" the of above mentioned neo-liberal order/current state of things.
Of course that all this is kind of circular, meaning the (neo-liberal) morality imposing itself via law on the current (and by now surpassed) morality, but that's how things usually go when it comes to societal theory.