“How Twitter Pushed Stakeholders under the (Musk) Bus”



This paper provides a case study of the acquisition of Twitter by Elon Musk. Our analysis indicates that when negotiating the sale of their company to Musk, Twitter’s leaders chose to disregard the interests of the company’s stakeholders and to focus exclusively on the interests of shareholders and the corporate leaders themselves. In particular, Twitter’s corporate leaders elected to push under the bus the interests of company employees, as well as the mission statements and core values to which Twitter had pledged allegiance for years.
Our analysis supports the view that the stakeholder rhetoric of corporate leaders, including in corporate mission and purpose statements, is mostly for show and is not matched by their actual decisions and conduct (Bebchuk and Tallarita (2020)). Our findings also suggest that corporate leaders selling their company should not be relied upon to safeguard the interests of stakeholders, contrary to the predictions of the implicit promises and team production theories of Coffee (1986), Shleifer-Summers (1988) and Blair-Stout (1999).

There is tension between the interests of owners and those of other “stakeholders”, which is why the interests of non-owner stakeholders require justification as in the linked article. The authors beg the question — they assume stakeholder interests are comparable to owner interests — then find a problem because Musk values his ownership interest in Twitter above the interests of the people he bought out and of the company’s non-owner employees. So what should Musk get in exchange for the $billions he spent? Arguments for more stakeholder rights are arguments for less property rights.

14 thoughts on ““How Twitter Pushed Stakeholders under the (Musk) Bus””

  1. The “stakeholder” thing has gained importance, if not credibility, in recent years, I think they may have an argument with non-profits that violate the terms of their 501c3 agreement by shifting the focus to politics instead of service. Big organizations like the Ford Foundation would give the founders a heart attack if they were to be informed of the current actions of “their” foundation. At least Melinda Gates has taken her name off that foundation since her divorce from “Epstein Island” Bill.

  2. Of course, if one looked at the ‘stakeholders’ in Public Schools, one would find the teachers, and more importantly the union that claims to speak for them.

    At a more general level, if you have a company with ‘stakeholders’ including not only shareholders and bondholders, but also employees (in multiple categories–US employees, non-US employees, people in different regions of a country, white collar employees, skilled trades employees, unskilled labor employes), customers, communities in which the company operates, small and large companies that make up the supply chain, etc…..then who is the Solomon who can weight all of the claims of those diverse claimants equally, impartially, and justly?

    Methinks that the answer turns out to be ‘government,’ and the metric used in practice turns out to be ‘political advantage to those applying the metric’

  3. Extremely irritating since “stockholders” thought they were investing in a business not a delusional community center.

  4. The heart of the problem is the Directors, who generally do not have much of a stake in the company. Solution would be a simple change in the law — Each Director required by law to invest 25% of his or her personal Net Worth into the company’s common stock, with the stock being held in a trust that could not be liquidated until 3 years after the Director resigns from the Board. Similarly, in the event of a buyout, the Director’s cash would be held for 3 years.

    But, but, but — that means most companies could not have someone like Soros or Bill Gates on the Board since 25% of their Net Worth would be more than many companies’ capitalization. Yes, but there is nothing to stop the Board paying Soros or Gates as an advisor if they so choose — if they assess as owners of the company that the money would be well spent.

  5. As I recall, Twitter is one of these new style companies where voting rights are limited to one class of stock, with ownership confined to the founder or founders. They’ll be happy to take your money in exchange for “shares” with no impact on how the place is run. The Twitter stock holders lucked out, they found a sucker before the company imploded. Stockholders in some other companies will be left standing when the music stops, in these digital days, they won’t even have a piece of fancy paper for a souvenir. Under this rubric, the stakeholders with no money in the pot will have more say than the stockholders.

  6. “Stakeholder” is a fancy new term for “employees”. As a practical matter only the owners/shareholders really matter, The employees and customers matter only marginally to the actual owners. The relations with the employees and customers may matter to the owners/investors, but if the pkan makes it appropriate, the employees and the customer base might be abandoned. I go to a local grocery for the products not because of the cashier’s smile. I don’t use Twitter because if the censorship/manipulation. “Stakeholder” is a joke by people who have a high opinion of themselves. In most corporation environments they are expendable and replaceable.

    Once Twitter/Musk decided on an open environment, the “Stakeholders” were history. Since they seemed immune to change, the practical option was elimination. They have no official standing with the organization.

  7. At least with Twitter stakeholders was voluntary so when push came.to shove those stakeholder “rights” got tossed over the side.

    You want to see an involuntary version of it? Look at local planning and development commissions which have the power to stop real estate or industrial projects if the needs of local groups aren’t met. Of course it didn’t take long for such groups to properly price their support and the delays and costs involved become just.the price of doing business.There is a reason why development companies spend.spot on government relation. A few years ago we were over at friends and the kids were watching the Sopranos. There was a scene where one of the mobsters was collecting extortion money from a local business and one of the kids cracked wise and said he didn’t know the Mafia was a.local community group

    Davos and ESG are the next stage of.stakeholder capitalism and while it will start voluntary it won’t be for long. Davos not only has the corporatist element but if you look at the guest list it looks to assimilate social and environmental groups and issues into its model. While ESG has some what petered out it will be back if you see it as just the beta version of a social credit score for business. Sure in the release version compliance will be voluntary but what happens if you don’t have a good ESGish score (as verified by your new social and environmental partners)? Will you get access to finance from hedge funds or banks that demand it? Think a bad score is going to help you with local or state governments when it comes time for approvals or getting contracts?

  8. I think David hits the nail on the head. “Stakeholders” is primarily a way to get around the little remaining reluctance of many in the US, and the vestigial correct understanding of what ‘fascism’ really is, to enable government control of private businesses.

  9. I stand corrected. Have I mentioned that my financial advice is just as good as my medical advice? Nevertheless, I have an opinion, so doesn’t that make me a stakeholder?

    Makes you wonder why they didn’t punch that ticket though. It’s the prefect way to keep anyone from interfering with the founder’s sacred vision and appointment with destiny.

    As far as some sort of social credit score getting between the VC’s or hedge funds and the chance to make a dollar, just not going to happen.

  10. The “stakeholder” claims seem to ignore the possibilities of stock options, profit-sharing, and restricted stock units (RSUs). A company that wanted to set up some kind of “stake” for employees to “hold” certain can do so.

  11. This paper is obvious nonsense tarted up to fool dumb and ignorant people into thinking it was based upon actual science by using the sort of format used by scientific papers.

    I could read similar garbage all day long on reddit, if I was so inclined.

    I’m not. It’s nothing more than yet another outlet for leftist propaganda, clumsily attempting to justify what they want to do anyway.

    That is, steal.

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