A More Realistic Approach to Directors' Duties
Transactions: Tennessee Journal of Business Law, v. 15, 2013, p. 15-31
18 Pages Posted: 6 Sep 2013 Last revised: 26 Feb 2014
Date Written: 2013
Expectations for what fiduciary duties can achieve in the corporate context are unrealistic. This segment of the law — and the alleged deficiencies therein — are blamed for corporate scandals, securities fraud, failed business plans, and even a company's insolvency. Risk is, however, inherent in business, and human beings are flawed. Fiduciary duty law cannot change these basic facts. To the extent we think it can, we will continue to be disappointed and frustrated. This essay considers recasting (and to a greater extent codifying) directors’ duties in a positive frame to help foster better director oversight. It does not suggest that codifying greater clarity into directors’ duties would result in more or less director liability; rather, the primary objective would be to improve director performance outside of the litigation sphere.
Keywords: fiduciary duties, risk, oversight, director performance
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