Skip to main content
    • Aa
    • Aa

Getting Real: Stakeholder Theory, Managerial Practice, and the General Irrelevance of Fiduciary Duties Owed to Shareholders


Stakeholder theorists have generally misunderstood the nature and ramifications of the fiduciary responsibilities that corporate directors owe their stockholders. This fiduciary duty requires the exercise of care, loyalty, and honesty with regard to the financial interests of stockholders. Such obligations do not conflict with the normative goals of stakeholder theory, nor, after a century of case law that includes Dodge Bros. v. Ford, do fiduciary responsibilities owed shareholders prevent managerial policies that are generous or sensitive to other corporate stakeholders. The common law recognizes a multitude of legal relationships between various corporate constituents, and fiduciary duties are only a subset of the obligations that arise from these relationships. This article argues that statute and case law can bring comparable legal protection to constituents other than stockholders, and suggests ways that these protections might be further strengthened. Implications for management education are also discussed.

Hide All
John Boatright . 1994. “What’s So Special about Shareholders?Business Ethics Quarterly. 4: 393408.

Victor Brudney . 1985. “Corporate Governance, Agency Costs, and the Rhetoric of Contract.” Columbia Law Review 85, no. 7: 14031444.

Victor Brudney . 1980. “Dividends, Discretion, and Disclosure.” Virginia Law Review 66, no. 1: 85129.

Thomas Donaldson and L. E. Preston 1995. “The Stakeholder Theory of the Corporation: Concepts, Evidence, and Implications.” Academy of Management Review 20: 6591.

Edward R. Freeman 1994. “The Politics of Stakeholder Theory: Some Future Directions.” Business Ethics Quarterly 4, no. 4: 409422.

Kenneth Goodpaster . 1991. “Business Ethics and Stakeholder Analysis.” Business Ethics Quarterly 1: 69.

Kenneth Goodpaster and Thomas E. Holloran 1994. “In Defense of a Paradox.” Business Ethics Quarterly 4, no. 3: 42330.

David Johnston . 1988. Roman Law of Trusts. Oxford: Claredon Press.

Tom Jones . 1995. “Instrumental Stakeholder Theory: A Synthesis of Ethics and Economics.” Academy of Management Review 20, no. 2: 404437.

Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Business Ethics Quarterly
  • ISSN: 1052-150X
  • EISSN: 2153-3326
  • URL: /core/journals/business-ethics-quarterly
Please enter your name
Please enter a valid email address
Who would you like to send this to? *


Full text views

Total number of HTML views: 0
Total number of PDF views: 8 *
Loading metrics...

Abstract views

Total abstract views: 655 *
Loading metrics...

* Views captured on Cambridge Core between September 2016 - 17th October 2017. This data will be updated every 24 hours.