Publication:
An economic analysis of corporate directors' fiduciary duties

Thumbnail Image
Identifiers
URI: https://hdl.handle.net/10016/7658
ISSN: 07416261
Files
economic_gutierrez_RJE_2003_ps.pdf (976.73 KB)
Publication date
2003
Defense date
Authors
Advisors
Tutors
Journal Title
Journal ISSN
Volume Title
Publisher
Wiley-Blackwell
Impact
Google Scholar
Export
Research Projects
Organizational Units
Journal Issue
Abstract
I present a principal-agent model where the shareholders (principal) can take legal action against the director (agent). The court's decision provides a verifiable but costly and imperfect signal on the director's fulfilment of his fiduciary duties. The director's remuneration can be made contingent not only on performance but also upon the court's decision. I show that when damage awards are high enough, the widespread use of liability insurance and limited-liability provisions that is observed in the United States is optimal because it allows for a more efficient litigation strategy to be ex post rational for the shareholders.
Description
Keywords
Bibliographic citation
The RAND Journal of Economics, 2003, v. 34, n. 3, pp. 516-535
Collections
DEE - Artículos de Revistas
Economists Online