No they don't, they get passed on to shareholders. The market cap of the company decreases by the amount of the fine (plus any predicted future effect of the lost money) and the stock price goes down to reflect that.
If the company could get away with paying workers less or decreasing its workforce in order to boost profitability, it already would have. It's not waiting for a fine to justify doing so.
Ehh, if they have to, but execs are going to do their very best not to pass on costs to shareholders.
Even if shareholders foot the bill, why would that be a desirable outcome? Are you arguing that we have to fine corporations instead of holding the decision makers responsible? What do you have against people taking responsibility for their own actions?
> If the company could get away with paying workers less or decreasing its workforce in order to boost profitability, it already would have. It's not waiting for a fine to justify doing so.
But they couldn't pay workers less or decrease workforce, because they needed those workers to execute the unethical business plan. They weren't waiting for a fine to cut workers, they were waiting for the cash cow to stop producing milk to cut workers who were necessary to keep the cash cow going.
this is the KEY thing that is always missed.
shareholder happiness level: monitored at all times, a KPI of utmost significance at the most senior levels.
worker/employee happiness level: monitored at the Q{1-4} level at best, a KPI of least significance at all levels.
But it's not up to execs, execs don't control the share price, no matter how much they wish they could. The market does. The market sees the fine, it adjusts the market cap, done.
> Even if shareholders foot the bill, why would that be a desirable outcome?
Because shareholders elected the board. That's the entire foundation of joint-stock corporations, that shareholders get the rewards but also suffer the losses.
Not directly, but surely I don't need to explain to you what effect cutting costs typically has on share price?
> Because shareholders elected the board. That's the entire foundation of joint-stock corporations, that shareholders get the rewards but also suffer the losses.
Sorry, I'm missing the part of this where you answered the question. Why is this a desirable outcome? What is the problem with holding human beings responsible for their own actions?
I don't give a fuck about the foundation of joint-stock corporations. If the foundations of joint-stock corporations result in sociopaths profiting off harming people with no consequences, the foundations of joint-stock corporations need to change or be discarded completely.
Surely you do, because sometimes the stock goes up if the workers weren't needed in the first place, sometimes it goes down because it shows the company is flailing, and sometimes it does nothing because it's business as usual.
You're operating under an illusion that execs have control over how the market will respond.
> Sorry, I'm missing the part of this where you answered the question.
And I'm missing the part where anything I wrote gave you the excuse to be rude. Please be civil, this is HN.
Why would there be a 1 to 1 relationship between the price of stocks and reality, when most investing is blind passive investing that ignores reality by design?
Stock prices are not rational and there is no consistent way to calculate the value of a company. An expensive media campaign that accomplishes nothing related to their business offerings and may even lose the company significant amounts of money can end up raising a stock price. And you also don't have unlimited time to try and wait out stocks which also have so many other random factors being thrown in over the years.
A 0.33L can would’ve been too little, but a 1L bottle too much, and a 1.5L bottle far too much. 0.50L was the perfect size.
The pricing?
0.33L - €0.66 (€2.00 per L)
0.50L - €1.48 (€2.96 per L)
1.00L - €1.93 (€1.93 per L)
1.50L - €2.09 (€1.39 per L)
Initially this made me angry, as it is very clear they figured out that the 0.5L bottle is the most convenient size, and put a huge premium on that, as people that need that size (for say, in a backpack) will pay it for lack of alternative. In other words, the price the market will bear.
But then I reminded myself, modern companies will always try to give you the least amount of value for the highest price the market will bear.
This is also why you should never feel bad if you can get one over on a company. Pricing error that gets you expensive shoes for €1? Screw ‘em. Contractual obligation that effectively gives you lifetime for €1? Screw ‘em. They’ll do the same to you whenever they can.
I wish businesses believed in being synergistic with their customers and nurturing loyalty, but alas. Not the times we live in.
I recently saw a £700 bicycle carbon fork on sale for £70, new, the shop just forgot a zero. I didnt buy it out of feeling bad :(
If a company like Amazon mispriced something that way, I'd gladly buy it.
Modern consumers will always try to pay as little as possible for the highest amount of value they can.
The proper term for this is The Law of Supply and Demand. It's how markets work.
BTW, your anecdote illustrates why making the effort to learn some math while in grade school is worthwhile.
As an aside, the example would be even more dramatic with non-sugar, where the 0.5L bottle is €1.88, but the 1L bottle is €1.95, due to both the price premium of ‘convenient size’ and ‘healthy alternative’ being stacked.
That's not how S&D works. S&D is in-play even if Fanta had a monopoly. Even if the prices were set by the government. Governments have tried every scheme imaginable to repeal the law of S&D, but they never work.
BTW, I gave up all soda about 15 years ago. It took about a year to finally stop craving it. I no longer have any desire for it.
Besides the health issues, it has saved me a ton of money in aggregate.
Soda for me is a guilty pleasure, like a good barbecue, or a bottle of red wine. But I appreciate the heads-up!
Also pretty much everyone: Wait, the decisions businesses make that affect me absolutely suck!
Purely in theory in a vacuum, yes. In practice, you'll have a very hard time finding examples where that actually happened. At best, the stock takes a momentary dip and next ~week it's back to where it was.
But so what if the stock is back up the following week? More things happened over the following week. You're missing the fact that it would have been up even higher if it weren't for the fine. (Alternatively, the stock also might go down even further the following week. But similarly, it wouldn't have gone down as much if not for the fine.)
This is not theory, this is how stocks actually work in the aggregate. If they didn't, you'd be able to make a lot of easy money off the stock market otherwise.
Also, they _are_ cutting employees. There have been a lot of layoffs recently, and some of them have explicitly stated it'd not because they can't afford those employees.
Yes HP is laying off employees just like pretty much every other large tech company right now. Which shows you it has nothing to do with fines, and rather everything to do with industry-wide overexpansion during COVID and high interest rates now.
Exactly!
I don’t know how to deal with people who talk about the economy in terms of a perfect competition free market where all participants have full knowledge and are all equal in terms of power. If a physicist talked in terms of zero friction or spherical cows, we would laugh them off and never listen to them again. And yet people continue to talk about the economy with these assumptions that make zero friction and spherical cows look like practical applied physics.
Because it isn't true.
Another word for lack of knowledge is "risk".
The amount of risk is factored into the price of everything you buy and sell. For example, a name brand item sells for a higher price than a generic item because the name brand carries with it less risk for the buyer.
Note that "perfect information" is not part of the definition of it.