Oregon Law Review : Vol. 85 No. 4, p. 993-1026 : The Inadequacy of Fiduciary Duty Doctrine: Why Coporate Managers Have Little to Fear and What Might Be Done About It
This Article explains the current state of corporate responsibility by focusing on what has been largely disregarded in academic discourse to date: the interconnectedness of regulatory regimes and fiduciary duty doctrine. Part I begins by examining the history and evolution of regulatory control over the corporate form. In doing so, it shows the gradual loosening of control over corporations as those entities gained prominence in the United States economy. Part I also shows that this loosening was accepted because of the belief that common law fiduciary duty doctrine would provide sufficient monitoring of managerial behavior. Part II of this Article outlines the devolution of those corporate fiduciary duties that were supposed to safeguard the corporate arena. It explores the historic bases of the traditional fiduciary duties of loyalty and care and examines how far the doctrine has moved from these historic baselines over time. This perspective shows that the effectiveness of traditional fiduciary duties as a control mechanism over corporate management has diminished greatly over time to the point where they now are of little effect. The Article concludes that the loosening of regulatory control over corporate management, in the mistaken belief that fiduciary duty would provide sufficient disciplining incentive, helped create a culture where the current corporate scandals could flourish.