Taking the 'I' Out of 'Team': Intra-Firm Monitoring and the Content of Fiduciary Duties

USC Law School, Olin Working Paper No. 99-7

44 Pages Posted: 4 May 1999

See all articles by Eric L. Talley

Eric L. Talley

Columbia University - School of Law; European Corporate Governance Institute (ECGI)

Multiple version iconThere are 2 versions of this paper

Date Written: March 1999


This article employs a "team-production" account of the firm to investigate the relationship between organizational structure and fiduciary duties. Although the fiduciaries or "closely-held" firms (such as partnerships and close corporations) have historically been held to stricter standards of comportment than have their counterparts in widely-held firms (such as public corporations), a team-production analysis raises some troubling questions about this traditional distinction. In particular, I shall argue that within closely-held firms, enhanced fiduciary duties can create inefficient monitoring incentives among team members -- a problem that is largely avoided within widely-held organizational structures. Moreover, these strategic costs imply that weaker rather than stricter fiduciary obligations are more appropriate within at least certain closely-held firms. This observation holds a number of practical implications, both for statutory law and for doctrinal development.

JEL Classification: D21, D23, G34

Suggested Citation

Talley, Eric L., Taking the 'I' Out of 'Team': Intra-Firm Monitoring and the Content of Fiduciary Duties (March 1999). USC Law School, Olin Working Paper No. 99-7, Available at SSRN: https://ssrn.com/abstract=161188 or http://dx.doi.org/10.2139/ssrn.161188

Eric L. Talley (Contact Author)

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