Sacred Cow

What Is a Sacred Cow?

A sacred cow is a firmly held conviction that is rarely questioned and is largely exempt from analysis or resistance. Accordingly, fundamentals that are considered sacred cows are frequently held on to, even in the face of contradictory evidence.

Grasping Sacred Cows

Sacred cows are frequently widely held, yet may likewise involve assessment. A sacred cow might be considered in view of reliable wisdom. Thoughts labeled as sacred cows can likewise mirror one's belief system. While some might apply the label of sacred cow to the "free market" or to "industrialist corporations", others put the "lowest pay permitted by law" or "taxpayer supported initiatives" into this category.

In investing and somewhere else, the term is frequently used to excuse any thought that a creator is contending against. A few instances of thoughts that have been labeled sacred cows in finance incorporate mutual funds, dividend investing, saving 15% of one's income for retirement, financial planning, and Morningstar's style box.

Thoughts that are labeled sacred cows may likewise be alluded to as "fantasies" by some, particularly when a claim is contested. For example, whether universal healthcare ought to be given free to all residents might be a sacred cow to one group, yet considered ludicrous to a restricting group.

The term "sacred cow" is a reference to Hinduism, which worships the cow as a heavenly animal.

Exposing a Sacred Cow? Shareholder Value Maximization

A firm's under obligation duty to expand shareholder value is a genuine illustration of a sacred cow. It is commonly perceived that corporate directors and management have a duty to boost shareholder value, particularly for publicly traded companies. In any case, legal decisions recommend that this common wisdom is, as a matter of fact, a pragmatic legend — there is no legal duty to expand profits in the management of a corporation.

The thought can be followed to a great extent to the curiously large impacts of a single obsolete and widely misconstrued governing by the Michigan Supreme Court's 1919 decision in Dodge versus Passage Motor Co., which was about the legal duty of a controlling majority shareholder with respect to a minority shareholder and not tied in with boosting shareholder value. Legal and organizational researchers, for example, Lynn Stout and Jean-Philippe Rob\u00e9 have explained on this legend finally. They conclude that shareholder maximization isn't just a distortion of a legal command yet additionally confounds the purpose of a firm's objectives versus its more extensive set of partners. Truth be told, they contend all the more firmly that putting shareholders; interest first damages investors, corporations, and the public.

While these papers were distributed in the mid 2010s, after a decade the mantra of expanding shareholder value stays a firmly held conviction by numerous people and firm management. This makes it a sacred cow that is hard to kill off.

Features

• A sacred cow is an intently held conviction that isn't to be questioned or violated.
• In finance and economics, sacred cows might allude to precepts like free-market capitalism, fair wages, or universal healthcare (contingent upon who you are conversing with).
• At times sacred cows are as yet held on to even on the off chance that they are proven to be fantasies or misguided.