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What we talk about when we talk about fiduciary duties: the changing role of a legal theory concept in corporate governance studies

Journal article
Authors Alexander Styhre
Published in Management and Organizational History
Volume 13
Issue 2
Pages 113-139
ISSN 17449359
Publication year 2018
Published at Department of Business Administration, Management & Organisation
Pages 113-139
Language en
Keywords Fiduciary duties, incomplete contract theory, legal theory, the contractual theory of the firm
Subject categories Business Administration


© 2018, © 2018 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group. Corporate law, as a constitutive law in the corporate system, includes the legal theory concept of fiduciary duties. Fiduciary duty law prescribes that a fiduciary should act in the interest of the beneficiary and without self-interest. Fiduciary law, even its proponents admit, is quite complicated to pin down into statutes, and yet it serves many ends in society. In the field of corporate governance, fiduciary law has been challenged by contract law and contractual relations. The proponents of the contractual theory of the firm suggest that contracts more effectively monitor and reduce agency costs, and discipline managers to act in the interest of shareholder, i.e. eo ipso, generate net economic welfare. The article examines how corporate legislation has been reinterpreted overtime, and how legal concepts such as contracts and fiduciary duties have to a varying degree been invoked in the corporate governance literature. In the current regime of shareholder primacy governance, fiduciary is a legal device that can be reintroduced to handle concerns regarding governance issues.

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