Do companies have a fiduciary duty to maximize returns to shareholders? We examined this issue recently, when we wrote about a nonprofit called B Lab, which has created a certification system for companies that have an environmental or social mission as well as a desire to make a profit. Every "B Corporation" must add a passage to its articles of incorporation which says that directors must take into account the interests of the environment, community, and employees—not just shareholders.
Many business owners believe this is necessary, because there is a common conception that companies must maximize returns to shareholders—no matter what the consequences are for everybody else. In reality, there is no such legal obligation for private companies. For public companies, however, there are instances in which the board would have to sell to the highest bidder, whether or not directors thought it was the best decision.
This raises the question: If the Bancrofts, who own the majority of Dow Jones' shares, decide they don't want to accept Rupert Murdoch's bid for the company, could they legally say no? Accepting the bid would clearly maximize shareholder returns. So would they risk a lawsuit from other shareholders if they say no?