Abstract

When a corporation "goes public" and seeks capital through sales of stock, management acquires not only a whole new set of bosses, but vastly increased responsibilities and must fulfill its duties as if administering a public trust. In 1960, a large number of companies "went public." Companies of all sizes and types, the majority of them had little in common, except their newly acquired public ownership, and a new set of duties made mandatory by their altered status. Most of these companies are generally well aware of their duties as publicly owned organizations. But there is one area of "duty" to which the author believes many companies could pay more attention: the duty to their stockholders. The implication of management's responsibilities to its stockholders is really a broad, over-all "attitude" that management should implement in its operations. In financial trust management, reference is often made to the "Prudent Man" who is expected to function at all times on behalf of the trust interest for which he is responsible. Managements would do well generally to adopt this "Prudent Man" approach in the conduct of their business.