This dissertation examined the question ‘Has section 172 (“s172”) of the UK’s Companies Act (“CA”) 2006 created an effective set of directors’ duties’? Prior to the advent of s172 CA 2006, there was no statutory form of direction concerning directors’ duties and obligations. However, with the intervention of s172, the pressure to take other stakeholders into consideration in the management of corporate affairs is now recognized .
Therefore, the essence of this research was to examine whether the law has adequately reflected a shift from the previous common law position, which favored shareholder primacy to a more inclusive approach .
{"title":"Directors' Duties: Section 172 of the UK Companies Act","authors":"Dr Temitope Omotola Odusanya","doi":"10.2139/ssrn.3851392","DOIUrl":"https://doi.org/10.2139/ssrn.3851392","url":null,"abstract":"This dissertation examined the question ‘Has section 172 (“s172”) of the UK’s Companies Act (“CA”) 2006 created an effective set of directors’ duties’? Prior to the advent of s172 CA 2006, there was no statutory form of direction concerning directors’ duties and obligations. However, with the intervention of s172, the pressure to take other stakeholders into consideration in the management of corporate affairs is now recognized .<br><br>Therefore, the essence of this research was to examine whether the law has adequately reflected a shift from the previous common law position, which favored shareholder primacy to a more inclusive approach .","PeriodicalId":376950,"journal":{"name":"Fiduciary Law eJournal","volume":"17 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-05-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"120841341","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Stakeholder groups appear to intuitively understand that logically the delivery of sustainable long-term value requires a healthy focus on value creation and on value preservation. Historically organizations have explicitly addressed the value creation imperative at a strategic level through their vision, mission statement, and corporate strategy. The value preservation imperative however while perhaps sometimes implied has rarely been explicitly addressed in the same manner at a strategic level. The difference between explicitly addressing the value creation obligation and implicitly addressing the value preservation obligation is considerable, and its impact has already had a profound effect on corporate culture and resulting corporate behavior. This paper outlines twelve significant developments which have occurred in recent times (2016 – 2020) as a growing number of regulators, standard setters, and other governance bodies finally begin to include explicit references to the value preservation imperative. These incremental steps are now directly impacting on corporate boardrooms as the moral obligation to preserve, protect, and defend stakeholder value is increasingly viewed as an important corporate consideration in terms of both company purpose and fiduciary duty.
{"title":"Value Preservation Increasingly Acknowledged as Primary Purpose and Fiduciary Duty","authors":"Sean Lyons","doi":"10.2139/ssrn.3785581","DOIUrl":"https://doi.org/10.2139/ssrn.3785581","url":null,"abstract":"Stakeholder groups appear to intuitively understand that logically the delivery of sustainable long-term value requires a healthy focus on value creation and on value preservation. Historically organizations have explicitly addressed the value creation imperative at a strategic level through their vision, mission statement, and corporate strategy. The value preservation imperative however while perhaps sometimes implied has rarely been explicitly addressed in the same manner at a strategic level. The difference between explicitly addressing the value creation obligation and implicitly addressing the value preservation obligation is considerable, and its impact has already had a profound effect on corporate culture and resulting corporate behavior. \u0000 \u0000This paper outlines twelve significant developments which have occurred in recent times (2016 – 2020) as a growing number of regulators, standard setters, and other governance bodies finally begin to include explicit references to the value preservation imperative. These incremental steps are now directly impacting on corporate boardrooms as the moral obligation to preserve, protect, and defend stakeholder value is increasingly viewed as an important corporate consideration in terms of both company purpose and fiduciary duty.","PeriodicalId":376950,"journal":{"name":"Fiduciary Law eJournal","volume":"59 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-02-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121731882","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The increasingly protean irrevocable trust puts substantive trust law and the federal transfer taxes at cross-purposes. State trust law’s overriding objective is simply to carry out the intent of the trust settlor. Settlors intend to manage or control the benefits from gifts over some period of time—that is, after all, the purpose of the donative trust. In contrast, the federal transfer taxes seek, by major policy purpose, to decrease the incidence of dynastic wealth—wealth locked into single-family possession and passed on from generation to generation. Yet state legislative changes to trust laws—abandoning or extending the terms of rules against perpetuities, for example—pave the way for dynastic wealth by allowing trusts to entrench that wealth in families for generations, or even indefinitely. Evolving trust laws also increasingly permit trust settlors, often by postmortem proxy, to repeatedly modify, refresh or even completely restructure irrevocable trusts in response to post-transfer events.
This essay looks critically at a change to the common law equitable deviation doctrine that ensures that irrevocable trusts can always be optimized in the face of circumstantial uncertainty. This modified equitable deviation doctrine invites trustees and courts to first imagine how the settlor would respond to unanticipated circumstances affecting an irrevocable trust, then further directs modification of the trust terms accordingly. Although this development expands settlor control over irrevocable trusts qualitatively and chronically, thereby increasing both the durability and duration of dynastic wealth, current federal transfer tax provisions are likely insufficient to discourage its proliferation. Trust settlors privileged to take advantage of the post-disposition control offered by trust laws already own a vastly disproportionate share of the nation’s wealth. Perpetual post-transfer control of wealth by a trust settlor or his proxy further entrenches this inequality of ownership and contributes to the problems it causes, including the erosion of democratic institutions. Unmitigated allegiance to the expansive value of freedom of disposition and its corollary, “the intent of the donor,” should be tempered, in post-transfer analyses, with a view to its consequences. Failing that, especially but not exclusively where costs to third parties are implicated, certain post-disposition trust modifications should be deemed new dispositions that bring about transfer tax penalties to the trust corpus.
{"title":"What Would Settlor Do? Immortal Trust Settlors, Federal Transfer Taxes, and the Protean Irrevocable Trust","authors":"K. D. Schenkel","doi":"10.2139/ssrn.3825827","DOIUrl":"https://doi.org/10.2139/ssrn.3825827","url":null,"abstract":"The increasingly protean irrevocable trust puts substantive trust law and the federal transfer taxes at cross-purposes. State trust law’s overriding objective is simply to carry out the intent of the trust settlor. Settlors intend to manage or control the benefits from gifts over some period of time—that is, after all, the purpose of the donative trust. In contrast, the federal transfer taxes seek, by major policy purpose, to decrease the incidence of dynastic wealth—wealth locked into single-family possession and passed on from generation to generation. Yet state legislative changes to trust laws—abandoning or extending the terms of rules against perpetuities, for example—pave the way for dynastic wealth by allowing trusts to entrench that wealth in families for generations, or even indefinitely. Evolving trust laws also increasingly permit trust settlors, often by postmortem proxy, to repeatedly modify, refresh or even completely restructure irrevocable trusts in response to post-transfer events.<br><br>This essay looks critically at a change to the common law equitable deviation doctrine that ensures that irrevocable trusts can always be optimized in the face of circumstantial uncertainty. This modified equitable deviation doctrine invites trustees and courts to first imagine how the settlor would respond to unanticipated circumstances affecting an irrevocable trust, then further directs modification of the trust terms accordingly. Although this development expands settlor control over irrevocable trusts qualitatively and chronically, thereby increasing both the durability and duration of dynastic wealth, current federal transfer tax provisions are likely insufficient to discourage its proliferation. Trust settlors privileged to take advantage of the post-disposition control offered by trust laws already own a vastly disproportionate share of the nation’s wealth. Perpetual post-transfer control of wealth by a trust settlor or his proxy further entrenches this inequality of ownership and contributes to the problems it causes, including the erosion of democratic institutions. Unmitigated allegiance to the expansive value of freedom of disposition and its corollary, “the intent of the donor,” should be tempered, in post-transfer analyses, with a view to its consequences. Failing that, especially but not exclusively where costs to third parties are implicated, certain post-disposition trust modifications should be deemed new dispositions that bring about transfer tax penalties to the trust corpus.","PeriodicalId":376950,"journal":{"name":"Fiduciary Law eJournal","volume":"66 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-01-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133694616","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
For the past several decades, jurists have invested significant efforts in developing the law in general, and private law, in particular, in terms of pluralism. However, the conceptualization of corporate law and governance according to pluralist principles rarely exists. This Article is the first in the legal literature to address this deficiency by providing a unique pluralist theory of corporate governance regimes, based on social systems thinking and the framework of complexity that is rooted in the natural sciences and has since spread to social disciplines, as well. The complexity framework perceives organizations as a subset of social systems that represent a sophisticated web of interconnectivity between human beings and their environment. Organizations are made of interactive, adaptive agents, groups, and departments, that communicate with one another through feedback mechanisms. The features of such exchanges, and their normative implications, may significantly differ between numerous companies that operate in various industries. Accordingly, the complexity framework provides theoretical grounds for skepticism about any policies or structures that are applicable to all times and all contexts. Therefore, rather than perceiving corporate governance as being identically applicable to all corporations, the law must meet the challenge of complexity by designing contextual governance arrangements, following a firm-specific perspective. I believe that the versatility of companies’ characteristics indicates that a “one-size-fits-all” approach should be avoided, and a contextual approach should be embraced when crafting tailor-made law. Furthermore, I argue that in conditions of complexity, corporate governance eco-systems should be designed with a firm-specific perspective that incorporates the effect of the corporation participants’ heterogeneity, the heterogeneity of its internal power relations, and the heterogeneity of industries on their performance. These novel arguments have profound implications for redesigning fundamental legal doctrines—such as fiduciary duties of controlling shareholders; regulation of related party transactions; the company objective; and officers’ duty of care in different legal systems.
{"title":"The Pluralist Foundations of Corporate Law and Governance","authors":"Leon Yehuda Anidjar PhD","doi":"10.2139/ssrn.3750857","DOIUrl":"https://doi.org/10.2139/ssrn.3750857","url":null,"abstract":"For the past several decades, jurists have invested significant efforts in developing the law in general, and private law, in particular, in terms of pluralism. However, the conceptualization of corporate law and governance according to pluralist principles rarely exists. This Article is the first in the legal literature to address this deficiency by providing a unique pluralist theory of corporate governance regimes, based on social systems thinking and the framework of complexity that is rooted in the natural sciences and has since spread to social disciplines, as well. The complexity framework perceives organizations as a subset of social systems that represent a sophisticated web of interconnectivity between human beings and their environment. Organizations are made of interactive, adaptive agents, groups, and departments, that communicate with one another through feedback mechanisms. The features of such exchanges, and their normative implications, may significantly differ between numerous companies that operate in various industries. Accordingly, the complexity framework provides theoretical grounds for skepticism about any policies or structures that are applicable to all times and all contexts. Therefore, rather than perceiving corporate governance as being identically applicable to all corporations, the law must meet the challenge of complexity by designing contextual governance arrangements, following a firm-specific perspective. I believe that the versatility of companies’ characteristics indicates that a “one-size-fits-all” approach should be avoided, and a contextual approach should be embraced when crafting tailor-made law. Furthermore, I argue that in conditions of complexity, corporate governance eco-systems should be designed with a firm-specific perspective that incorporates the effect of the corporation participants’ heterogeneity, the heterogeneity of its internal power relations, and the heterogeneity of industries on their performance. These novel arguments have profound implications for redesigning fundamental legal doctrines—such as fiduciary duties of controlling shareholders; regulation of related party transactions; the company objective; and officers’ duty of care in different legal systems.","PeriodicalId":376950,"journal":{"name":"Fiduciary Law eJournal","volume":"54 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-12-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134028299","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Countless high-profile abuses of user data by leading technology companies have raised a basic question: should firms that traffic in user data be held legally responsible to their users as “information fiduciaries”? Privacy legislation to impose fiduciary duties of care, confidentiality and loyalty on data collectors enjoys bipartisan support but faces strong opposition from scholars. First, critics argue that the information fiduciary concept flies in the face of fundamental corporate law principles that require firms to prioritize shareholder interests over those of users. Second, it is said that the overwhelming self-interest of digital companies makes fiduciary loyalty impossible as a practical matter from the outset. This essay finds neither objection convincing. The first objection rests on a mischaracterization of corporate law, which in reality would require compliance with user-regarding fiduciary obligations—the opposite of what critics fear. The second objection fails to convince because fiduciary law has proven itself adaptable enough to survive such challenges in other settings, such as in the asset management industry. The second objection nevertheless reveals a need for greater specificity of the fiduciary duties that would be imposed under the information fiduciary model, but even then it is unlikely that either objection would undermine the model.
{"title":"A General Defense of Information Fiduciaries","authors":"Andrew F. Tuch","doi":"10.2139/ssrn.3696946","DOIUrl":"https://doi.org/10.2139/ssrn.3696946","url":null,"abstract":"Countless high-profile abuses of user data by leading technology companies have raised a basic question: should firms that traffic in user data be held legally responsible to their users as “information fiduciaries”? Privacy legislation to impose fiduciary duties of care, confidentiality and loyalty on data collectors enjoys bipartisan support but faces strong opposition from scholars. First, critics argue that the information fiduciary concept flies in the face of fundamental corporate law principles that require firms to prioritize shareholder interests over those of users. Second, it is said that the overwhelming self-interest of digital companies makes fiduciary loyalty impossible as a practical matter from the outset. \u0000 \u0000This essay finds neither objection convincing. The first objection rests on a mischaracterization of corporate law, which in reality would require compliance with user-regarding fiduciary obligations—the opposite of what critics fear. The second objection fails to convince because fiduciary law has proven itself adaptable enough to survive such challenges in other settings, such as in the asset management industry. The second objection nevertheless reveals a need for greater specificity of the fiduciary duties that would be imposed under the information fiduciary model, but even then it is unlikely that either objection would undermine the model.","PeriodicalId":376950,"journal":{"name":"Fiduciary Law eJournal","volume":"21 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-09-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115005037","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article specifically addresses the theme of revitalisation of Australian law in the facilitation of purpose-based companies. It is the second of two articles on purpose-based governance in the charitable and for-profit spheres. Building on the first article, this article critically analyses relevant features of the Australian corporations law regime. It pays close attention to challenges relating to the application of directors’ duties where companies have multiple purposes and to the drafting of appropriate constitutional provisions. In so doing it draws on insights from overseas jurisdictions that have enacted legislation to enable purpose-based companies.
{"title":"Use of the Corporate Form for Public Benefit - Revitalisation of Australian Corporations Law","authors":"R. Langford","doi":"10.53637/eryj2395","DOIUrl":"https://doi.org/10.53637/eryj2395","url":null,"abstract":"This article specifically addresses the theme of revitalisation of Australian law in the facilitation of purpose-based companies. It is the second of two articles on purpose-based governance in the charitable and for-profit spheres. Building on the first article, this article critically analyses relevant features of the Australian corporations law regime. It pays close attention to challenges relating to the application of directors’ duties where companies have multiple purposes and to the drafting of appropriate constitutional provisions. In so doing it draws on insights from overseas jurisdictions that have enacted legislation to enable purpose-based companies.","PeriodicalId":376950,"journal":{"name":"Fiduciary Law eJournal","volume":"202 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-08-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123272096","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In June of 2020, the Department of Labor proposed a rule-making on financial factors in selecting ERISA plan investments (“Proposal”), in particular environmental, social, and governance factors (“ESG”). In general, we are supportive of the Proposal’s central purpose of subjecting ESG investing to the same fiduciary principles of loyalty and prudence that are applicable to any type or kind of investment. We do, however, have some criticisms. Our basic point is that the law neither favors nor disfavors ESG investing. Any investment decision by an ERISA trustee or other fiduciary — whether in the context of a direct investment, shareholder engagement (including proxy voting), or menu construction, and whether reliant on ESG factors or otherwise — is subject to the same fiduciary principles embodied in the duties of loyalty and prudence. Our chief criticisms, therefore, reflect instances in which the Proposal differentiates or could be construed as differentiating ESG investing from other types or kinds of investment strategies. First, the Proposal and accompanying commentary could be read to suggest that all manner of ESG investing is inherently suspect, presumably on fiduciary loyalty grounds, and therefore that ESG investing by an ERISA trustee or other fiduciary is always subject to enhanced scrutiny that requires extra process relative to other types of kinds of investment strategies. Such a position is inconsistent with law and sound policy. To be sure, an ERISA trustee or other fiduciary violates the duty of loyalty if she uses ESG factors to provide benefits for third parties (what we call “collateral benefits ESG”). However, use of ESG factors in pursuit of enhanced risk-adjusted returns (what we call “risk-return ESG”) is not suspect under the duty of loyalty. Instead, risk-return ESG is analyzed under the duty of prudence, which applies in the same manner to risk-return ESG as to any other type or kind of investment strategy. Departure from neutral application of fiduciary principles also requires drawing distinctions between ESG investing and other investing, a definitional morass that would create uncertainty and invite litigation. Second, portions of the commentary are unclear or phrased in a manner that could be construed as taking positions, such as with respect to active versus passive investing, that are not consistent with neutral application of the principles of fiduciary investment law. The commentary is also notable for not addressing certain other relevant matters, such as the use of ESG factors in shareholder engagement (sometimes called “stewardship” or “active shareholding”). We identify material instances of such language or omissions and urge appropriate clarification, particularly regarding the “tiebreaker” rule for purportedly economically equivalent investments. This comment letter is largely but not entirely based on “Reconciling Fiduciary Duty and Social Conscience: The Law and Economics of ESG Investing
{"title":"Comment Letter of Professors Max M. Schanzenbach and Robert H. Sitkoff on the Department of Labor’s Proposed Rulemaking on Financial Factors in Selecting Plan Investments","authors":"Max M. Schanzenbach, Robert H. Sitkoff","doi":"10.2139/ssrn.3667080","DOIUrl":"https://doi.org/10.2139/ssrn.3667080","url":null,"abstract":"In June of 2020, the Department of Labor proposed a rule-making on financial factors in selecting ERISA plan investments (“Proposal”), in particular environmental, social, and governance factors (“ESG”). In general, we are supportive of the Proposal’s central purpose of subjecting ESG investing to the same fiduciary principles of loyalty and prudence that are applicable to any type or kind of investment. \u0000 \u0000We do, however, have some criticisms. Our basic point is that the law neither favors nor disfavors ESG investing. Any investment decision by an ERISA trustee or other fiduciary — whether in the context of a direct investment, shareholder engagement (including proxy voting), or menu construction, and whether reliant on ESG factors or otherwise — is subject to the same fiduciary principles embodied in the duties of loyalty and prudence. Our chief criticisms, therefore, reflect instances in which the Proposal differentiates or could be construed as differentiating ESG investing from other types or kinds of investment strategies. \u0000 \u0000First, the Proposal and accompanying commentary could be read to suggest that all manner of ESG investing is inherently suspect, presumably on fiduciary loyalty grounds, and therefore that ESG investing by an ERISA trustee or other fiduciary is always subject to enhanced scrutiny that requires extra process relative to other types of kinds of investment strategies. Such a position is inconsistent with law and sound policy. To be sure, an ERISA trustee or other fiduciary violates the duty of loyalty if she uses ESG factors to provide benefits for third parties (what we call “collateral benefits ESG”). However, use of ESG factors in pursuit of enhanced risk-adjusted returns (what we call “risk-return ESG”) is not suspect under the duty of loyalty. Instead, risk-return ESG is analyzed under the duty of prudence, which applies in the same manner to risk-return ESG as to any other type or kind of investment strategy. Departure from neutral application of fiduciary principles also requires drawing distinctions between ESG investing and other investing, a definitional morass that would create uncertainty and invite litigation. \u0000 \u0000Second, portions of the commentary are unclear or phrased in a manner that could be construed as taking positions, such as with respect to active versus passive investing, that are not consistent with neutral application of the principles of fiduciary investment law. The commentary is also notable for not addressing certain other relevant matters, such as the use of ESG factors in shareholder engagement (sometimes called “stewardship” or “active shareholding”). We identify material instances of such language or omissions and urge appropriate clarification, particularly regarding the “tiebreaker” rule for purportedly economically equivalent investments. \u0000 \u0000This comment letter is largely but not entirely based on “Reconciling Fiduciary Duty and Social Conscience: The Law and Economics of ESG Investing ","PeriodicalId":376950,"journal":{"name":"Fiduciary Law eJournal","volume":"34 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-07-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124357326","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We examine the variable annuity market to study conflicts of interest and the effect of fiduciary duty in brokerage markets. Insurers typically pay brokers higher commissions for selling more expensive annuities. Our results indicate that sales are four times as sensitive to brokers’ interests as to investors’. To limit conflicts of interest, the Department of Labor proposed a rule in 2016 holding brokers to a fiduciary standard. We find that after the proposal, sales of high-expense products fell by 52% as sales became more sensitive to expenses. Based on our structural estimates, investor welfare improved overall.
{"title":"Conflicting Interests and the Effect of Fiduciary Duty — Evidence from Variable Annuities","authors":"Mark L. Egan, Shan Ge, John P. Tang","doi":"10.2139/ssrn.3652115","DOIUrl":"https://doi.org/10.2139/ssrn.3652115","url":null,"abstract":"\u0000 We examine the variable annuity market to study conflicts of interest and the effect of fiduciary duty in brokerage markets. Insurers typically pay brokers higher commissions for selling more expensive annuities. Our results indicate that sales are four times as sensitive to brokers’ interests as to investors’. To limit conflicts of interest, the Department of Labor proposed a rule in 2016 holding brokers to a fiduciary standard. We find that after the proposal, sales of high-expense products fell by 52% as sales became more sensitive to expenses. Based on our structural estimates, investor welfare improved overall.","PeriodicalId":376950,"journal":{"name":"Fiduciary Law eJournal","volume":"196 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123366394","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Sometimes it is possible to deal productively with the subject matter of choosing and making decisions without actually settling upon any particular theory of choice. This is the case in the law of business organisations, which does not settle upon a theory of choice because it does not consider itself the ultimate decision maker. Rather, the law develops rules to allocate decision-making authority among the various parties. Utilising only a few basic principles of decision theory, the law of business organisation creates a structure for allocating decision-making responsibility on many different levels. However, it leaves the ultimate decision makers free not only to make substantive decisions for themselves but also to select from among the various theories of choice for doing so.
{"title":"Decision Theory and Allocating Decision Making in the Firm","authors":"Julian Velasco","doi":"10.2139/ssrn.3506810","DOIUrl":"https://doi.org/10.2139/ssrn.3506810","url":null,"abstract":"Sometimes it is possible to deal productively with the subject matter of choosing and making decisions without actually settling upon any particular theory of choice. This is the case in the law of business organisations, which does not settle upon a theory of choice because it does not consider itself the ultimate decision maker. Rather, the law develops rules to allocate decision-making authority among the various parties. Utilising only a few basic principles of decision theory, the law of business organisation creates a structure for allocating decision-making responsibility on many different levels. However, it leaves the ultimate decision makers free not only to make substantive decisions for themselves but also to select from among the various theories of choice for doing so.","PeriodicalId":376950,"journal":{"name":"Fiduciary Law eJournal","volume":"8 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-12-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132348095","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
UK pension fund trustees’ interpretations of their fiduciary duties may shape pension fund approaches to corporate stewardship and engagement envisioned by the UK Stewardship Code. Data from interviews with pension fund trustees, executives, investment intermediaries and pensions experts reveals interpretive pluralism of the concept of fiduciary duty in the area of pension funds. This article develops a model identifying the spectrum of pension fund engagement, linking interpretations of fiduciary duty to intensity and methods of engagement in practice. The findings help disambiguate the concept of ‘Fiduciary Duty’, highlighting the practical challenges of Stewardship Code application. These insights are relevant to the ongoing revisions of the Stewardship Code and policy clarifications of the nature of fiduciary duty by the UK Financial Conduct Authority. The paper encourages trustees, regulators and others to consider what role pension fund trustees should have in stewardship, which may not be directly relevant to their fiduciary duties as trustees.
{"title":"Fiduciary Duty Under the Microscope: Stewardship and the Spectrum of Pension Fund Engagement","authors":"Anna Tilba, A. Reisberg","doi":"10.1111/1468-2230.12413","DOIUrl":"https://doi.org/10.1111/1468-2230.12413","url":null,"abstract":"UK pension fund trustees’ interpretations of their fiduciary duties may shape pension fund approaches to corporate stewardship and engagement envisioned by the UK Stewardship Code. Data from interviews with pension fund trustees, executives, investment intermediaries and pensions experts reveals interpretive pluralism of the concept of fiduciary duty in the area of pension funds. This article develops a model identifying the spectrum of pension fund engagement, linking interpretations of fiduciary duty to intensity and methods of engagement in practice. The findings help disambiguate the concept of ‘Fiduciary Duty’, highlighting the practical challenges of Stewardship Code application. These insights are relevant to the ongoing revisions of the Stewardship Code and policy clarifications of the nature of fiduciary duty by the UK Financial Conduct Authority. The paper encourages trustees, regulators and others to consider what role pension fund trustees should have in stewardship, which may not be directly relevant to their fiduciary duties as trustees.","PeriodicalId":376950,"journal":{"name":"Fiduciary Law eJournal","volume":"39 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133675700","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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