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Dalia T. Mitchell

Chapter 19 follows the development of US corporate law across the twentieth century via the thread of fiduciary duties. At the beginning of the century, it shows, corporate directors were held to high legal standards, regarded by the law as trustees for shareholders (and, briefly, for the community as well)—an approach to fiduciary duties she attributes to widespread fears of corporate overreach. Over the century’s course, however, as fears of corporate power receded, judges and legal scholars lowered the standard. By mid-century directors were seen not as trustees for shareholders but as their representatives, and by the end of the century directors were regarded as agents for largely passive shareholders. At each step directors’ fiduciary mandates shrank, so that, by the twenty-first century, all that was required of directors was that they followed certain procedures and did not act in subjectively bad faith. Shareholders seeking protection were to look not to the law but to the markets. Here the history of modern US corporate law is a history of failure to protect shareholders and society.