Shareholder Primacy and the Moral Obligation of Directors

48 Pages Posted: 27 Oct 2020 Last revised: 20 Nov 2020

See all articles by Mark Loewenstein

Mark Loewenstein

University of Colorado Law School

Date Written: September 9, 2020


The fiduciary obligations of corporate directors is one of the most written about and important topics in corporate law. Increasingly, critics of American capitalism have urged that corporations, and implicitly corporate directors, act in a more socially responsible fashion and thus eschew the notion of shareholder primacy is the exclusive guide to a director’s fiduciary duty. On this view, directors must consider the effect of their actions on “stakeholders” other than shareholders and be guided by morality – do the right thing – when making business judgments.

When directors move away from shareholder primacy, however, decision-making becomes more difficult and problematic. This article analyzes the arguments that underpin a rejection of shareholder primacy, alternatives to shareholder primacy, and the utility of morality as a guide for directors making business judgments.

Keywords: shareholder primacy, directors, corporate governance, moral obligation

Suggested Citation

Loewenstein, Mark J., Shareholder Primacy and the Moral Obligation of Directors (September 9, 2020). U of Colorado Law Legal Studies Research Paper No. 20-52, Available at SSRN: or

Mark J. Loewenstein (Contact Author)

University of Colorado Law School ( email )

Campus Box 401
Boulder, CO 80309
United States
303-492-7102 (Phone)
303-492-1200 (Fax)

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