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Full-Text Articles in Law
Managers' Fiduciary Duty Upon The Firm's Insolvency: Accounting For Performance Creditors, Alon Chaver, Jesse M. Fried
Managers' Fiduciary Duty Upon The Firm's Insolvency: Accounting For Performance Creditors, Alon Chaver, Jesse M. Fried
Vanderbilt Law Review
A corporation's managers generally owe a fiduciary duty to the corporation and its shareholders. Legal scholars interpret this duty as requiring the managers to maximize shareholder value. When a firm is solvent, the obligation to maximize shareholder value tends to give managers an incentive to deploy firm assets efficiently-that is, in a way that maximizes total value.
When a firm is insolvent, however, the duty to maximize shareholder value could lead managers to take actions that reduce the value of debt more than they increase the value of equity and therefore reduce total value. Accordingly, a number of courts have …
Why A Board? Group Decisionmaking In Corporate Governance, Stephen M. Bainbridge
Why A Board? Group Decisionmaking In Corporate Governance, Stephen M. Bainbridge
Vanderbilt Law Review
This Article begins by briefly describing the role of the board both in law and in practice. Part II explores the distinction be- tween consensus and authority as modes of institutional decision- making. As hierarchical institutions, corporations rely far more heavily on authority than on consensus. Yet, at the apex of the hierarchy is a collegial body that functions mainly by consensus.
Part III is the core of the Article. In order to evaluate corporate law's preference for collective decisionmaking, we need to know whether group decisionmaking is superior to that of individuals. A wealth of experimental data suggests that …