Edited by D. G. Smith and Andrew S. Gold
Structural bias has traditionally been a significant obstacle to adequate director monitoring. For a period of time early this century, the development of a fiduciary duty of good faith suggested that the Delaware courts were becoming serious about addressing structural bias, something we celebrated in previous work. In this chapter, after reviewing the concept of structural bias, we consider how Delaware’s corporate fiduciary duty law has evolved relevant to the concept. We find that recent case law calls into question how much force the duty of good faith has to address structural bias. That may be a serious problem, or it may not. Fiduciary duty law is not the only way to address structural bias. Other legal and non-legal mechanisms may address the problems that structural bias creates, and those mechanisms have evolved significantly. We ask whether other developments in this century have affected whether directors will be subject to structural bias, and whether, if they are so subject, they will be able to act on it. These developments include: the well-known monitoring failures at Enron, WorldCom, and Adelphia, proxy access, say on pay, independent director requirements, increasing diversity on boards, the increasing role of government in monitoring companies when Deferred and Non-Prosecution Agreements are entered into, and the rise of economic activism by hedge funds and corporate social responsibility. We conclude by pondering (inconclusively) what all of this may entail for future development of corporate fiduciary duties.
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.