Stephen Bainbridge

The law’s basic position on corporate social responsibility famously was articulated in Dodge v. Ford Motor Co. In 1916, Henry Ford owned 58% of the stock of Ford Motor Co. The Dodge brothers owned 10%. The remainder was owned by five other individuals. Beginning in 1908, Ford Motor paid a regular annual dividend of $1.2 million. Between 1911 and 1915 Ford Motor also regularly paid huge “special dividends,” totaling over $40 million. In 1916, Henry Ford announced that the company would stop paying special dividends. Instead, the firm’s financial resources would be devoted to expanding its business. Ford also continued the company’s policy of lowering prices, while improving quality. The Dodge brothers sued, asking the court to order Ford Motor to resume paying the special dividends and to enjoin the proposed expansion of the firm’s operations. At trial, Ford testified to his belief that the company made too much money and had an obligation to benefit the public and the firm’s workers and customers.

The plaintiff Dodge brothers contended an improper altruism towards his workers and customers motivated Ford. The court agreed, strongly rebuking Ford:

"A business corporation is organized and carried on primarily for the profit of the stockholders. The powers of the directors are to be employed for that end. The discretion of directors is to be exercised in the choice of means to attain that end, and does not extend to a change in the end itself, to the reduction of profits, or…

I think I said that, with the caveat that different jurisdictions have varying stipulations about what the fiduciary obligations of companies are, and there has been some legal controversy about the idea over the years. There has been, unfortunately, case law that takes the idea seriously [see esp. 1].

Today, I think, it is hard to find people who think it is good for companies to be obliged to maximise shareholder value. John Kay, a British economist, journalist and author of the excellent Kay Review [2], has written very well about the problems of expansive readings of fiduciary responsibility.

[1]: Katz v. Oak Indus., Inc., 508 A.2d 873, 879 (Del. Ch. 1986) judged “It is the obligation of directors to attempt, within the law, to maximize the long-run interests of the corporation’s stockholders." In Long v. Norwood Hills Corp., 380 S.W.2d 451 (Mo. Ct. App. 1964), the court observed: “Plaintiff cites many authorities [including Dodge] to show that the ultimate object of every ordinary trading corporation is the pecuniary gain of its stockholders and that it is for this purpose the capital has been advanced.” - via http://www.professorbainbridge.com/professorbainbridgecom/2012/05/case-law-on-the-fiduciary-duty-of-directors-to-maximize-the-wealth-of-corporate-shareholders.html#_ftn8

[2]: https://www.gov.uk/government/consultations/the-kay-review-of-uk-equity-markets-and-long-term-decision-making

Corporations, by definition, cannot have natural rights, and since they don’t exist outside of government, cannot have surrendered any autonomy to the government. Therefore, the Bill of Rights, and the First Amendment, cannot apply to them. QED.

My comment was primarily directed to the concluding statements (quoted above) that posit a deductive argument in absolute terms and that conclude that the Bill of Rights "cannot apply" to corporations. This absolute position simply cannot be defended based on the law. I agree with you that the issue can get more complicated if the point is limited to the question of free speech. That doesn't mean, though, that the argument is not overstated, which I think it is.

By the way, the distinction you make between rights accorded to entities versus rights accorded to individuals through entities is an important one and a thoughtful discussion on this distinction may be found here: http://www.professorbainbridge.com/professorbainbridgecom/2009/09/corporate-constitutional-rights.html.

The British have been trying to replace that rifled gun with the German L/55 smoothbore, too, but they don't have the money. It wasn't clear at the time the tank was designed, but the rifled barrel turns out to have been a mistake. The round for which it was primarily designed (High Explosive Squash Head, or HESH) hit a sort of technical dead end with the introduction of spall liners and layered composites in tank armor.

Read the comment by Steven Den Beste, who explains the situation pretty well (aside from getting the HESH acronym wrong):

http://www.professorbainbridge.com/professorbainbridgecom/2010/01/challenger-v-abrams-who-wins.html

There are two standards for a corporate executive to consider:
1) What the majority of the shareholders say
2) What a court would rule if a minority of the shareholders decided to sue the executive on the grounds that they (and presumably the majority stake) are depriving the minority shareholder of profits they have a legal fiduciary responsibility to provide.

What you are speaking about is #2. There is a high bar for such lawsuits, but there is a legal standard.

http://www.professorbainbridge.com/professorbainbridgecom/2012/05/case-law-on-the-fiduciary-duty-of-directors-to-maximize-the-wealth-of-corporate-shareholders.html

First link in the quick Google search I did, which starts with a story where Henry Ford wanted to stop paying special dividends to partial owners. "At trial, Ford testified to his belief that the company made too much money and had an obligation to benefit the public and the firm’s workers and customers." The judge did no agree. I haven't read the whole article yet, but it seems definitely to apply (and also notes there is little precedent in this area).

1: http://www.professorbainbridge.com/professorbainbridgecom/2012/05/case-law-on-the-fiduciary-duty-of-directors-to-maximize-the-wealth-of-corporate-shareholders.html