The Inadequacy of Fiduciary Duty Doctrine: Why Corporate Managers Have Little to Fear and What Might Be Done About it
35 Pages Posted: 27 Feb 2008 Last revised: 16 Mar 2008
This article discusses the inadequacy of current corporate fiduciary duty doctrine to police corporate managers effectively as demonstrated by the likes of Kenneth Lay and Bernie Ebbers. It traces the development of regulatory control over American corporations and shows how that control weakened over time. It then outlines the devolution of corporate fiduciary duties that were meant to safeguard the corporate arena in place of strict regulatory control. It shows how the effectiveness of traditional fiduciary duties has eroded to the point where they exercise little meaningful constraints. The article then argues that that some change is needed and suggests that the newly articulated duty of good faith could play a role in disciplining corporate managers if that duty is carefully defined and applied.
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