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Do fiduciary duties matter?

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Zeitschriftentitel: Corporate Governance: The international journal of business in society
Personen und Körperschaften: Warburton, A. Joseph
In: Corporate Governance: The international journal of business in society, 11, 2011, 5, S. 541-548
Format: E-Article
Sprache: Englisch
veröffentlicht:
Emerald
Schlagwörter:
Business, Management and Accounting (miscellaneous)
author_facet Warburton, A. Joseph
Warburton, A. Joseph
author Warburton, A. Joseph
spellingShingle Warburton, A. Joseph
Corporate Governance: The international journal of business in society
Do fiduciary duties matter?
Business, Management and Accounting (miscellaneous)
author_sort warburton, a. joseph
spelling Warburton, A. Joseph 1472-0701 Emerald Business, Management and Accounting (miscellaneous) http://dx.doi.org/10.1108/14720701111176957 <jats:sec><jats:title content-type="abstract-heading">Purpose</jats:title><jats:p><jats:italic>The purpose of this paper is to explore whether fiduciary duties impact the behavior of firm insiders. Trust law imposes stricter fiduciary obligations on insiders than corporate law does. This paper seeks to examine whether the difference in fiduciary duties impacts agency conflict, performance, and/or risk taking.</jats:italic></jats:p></jats:sec><jats:sec><jats:title content-type="abstract-heading">Design/methodology/approach</jats:title><jats:p><jats:italic>The paper takes an empirical approach to answering the question by comparing mutual funds organized as trusts and as corporations. The existence of these two types of organizations within the same industry offers a unique laboratory for the study of the effects of fiduciary duties.</jats:italic></jats:p></jats:sec><jats:sec><jats:title content-type="abstract-heading">Findings</jats:title><jats:p><jats:italic>Mutual funds organized in trust form charge significantly lower fees and take on less risk than equivalent mutual funds organized in corporate form. Evidence also suggests that the trusts tend to under‐perform their corporate counterparts, even after adjusting for differences in risk.</jats:italic></jats:p></jats:sec><jats:sec><jats:title content-type="abstract-heading">Originality/value</jats:title><jats:p><jats:italic>Much of the existing literature on firm governance and investor protection focuses on the corporation and, hence, takes organizational form as a given. By comparing trusts and corporations, this paper examines governance at a more fundamental level and exploits heterogeneity in corporate and trust fiduciary duties. The results have implications for corporate governance design, suggesting that heightened fiduciary duties can enhance investor protection by mitigating agency conflict and managerial risk taking, though at the possible cost of inferior risk‐adjusted performance.</jats:italic></jats:p></jats:sec> Do fiduciary duties matter? Corporate Governance: The international journal of business in society
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title Do fiduciary duties matter?
title_unstemmed Do fiduciary duties matter?
title_full Do fiduciary duties matter?
title_fullStr Do fiduciary duties matter?
title_full_unstemmed Do fiduciary duties matter?
title_short Do fiduciary duties matter?
title_sort do fiduciary duties matter?
topic Business, Management and Accounting (miscellaneous)
url http://dx.doi.org/10.1108/14720701111176957
publishDate 2011
physical 541-548
description <jats:sec><jats:title content-type="abstract-heading">Purpose</jats:title><jats:p><jats:italic>The purpose of this paper is to explore whether fiduciary duties impact the behavior of firm insiders. Trust law imposes stricter fiduciary obligations on insiders than corporate law does. This paper seeks to examine whether the difference in fiduciary duties impacts agency conflict, performance, and/or risk taking.</jats:italic></jats:p></jats:sec><jats:sec><jats:title content-type="abstract-heading">Design/methodology/approach</jats:title><jats:p><jats:italic>The paper takes an empirical approach to answering the question by comparing mutual funds organized as trusts and as corporations. The existence of these two types of organizations within the same industry offers a unique laboratory for the study of the effects of fiduciary duties.</jats:italic></jats:p></jats:sec><jats:sec><jats:title content-type="abstract-heading">Findings</jats:title><jats:p><jats:italic>Mutual funds organized in trust form charge significantly lower fees and take on less risk than equivalent mutual funds organized in corporate form. Evidence also suggests that the trusts tend to under‐perform their corporate counterparts, even after adjusting for differences in risk.</jats:italic></jats:p></jats:sec><jats:sec><jats:title content-type="abstract-heading">Originality/value</jats:title><jats:p><jats:italic>Much of the existing literature on firm governance and investor protection focuses on the corporation and, hence, takes organizational form as a given. By comparing trusts and corporations, this paper examines governance at a more fundamental level and exploits heterogeneity in corporate and trust fiduciary duties. The results have implications for corporate governance design, suggesting that heightened fiduciary duties can enhance investor protection by mitigating agency conflict and managerial risk taking, though at the possible cost of inferior risk‐adjusted performance.</jats:italic></jats:p></jats:sec>
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description <jats:sec><jats:title content-type="abstract-heading">Purpose</jats:title><jats:p><jats:italic>The purpose of this paper is to explore whether fiduciary duties impact the behavior of firm insiders. Trust law imposes stricter fiduciary obligations on insiders than corporate law does. This paper seeks to examine whether the difference in fiduciary duties impacts agency conflict, performance, and/or risk taking.</jats:italic></jats:p></jats:sec><jats:sec><jats:title content-type="abstract-heading">Design/methodology/approach</jats:title><jats:p><jats:italic>The paper takes an empirical approach to answering the question by comparing mutual funds organized as trusts and as corporations. The existence of these two types of organizations within the same industry offers a unique laboratory for the study of the effects of fiduciary duties.</jats:italic></jats:p></jats:sec><jats:sec><jats:title content-type="abstract-heading">Findings</jats:title><jats:p><jats:italic>Mutual funds organized in trust form charge significantly lower fees and take on less risk than equivalent mutual funds organized in corporate form. Evidence also suggests that the trusts tend to under‐perform their corporate counterparts, even after adjusting for differences in risk.</jats:italic></jats:p></jats:sec><jats:sec><jats:title content-type="abstract-heading">Originality/value</jats:title><jats:p><jats:italic>Much of the existing literature on firm governance and investor protection focuses on the corporation and, hence, takes organizational form as a given. By comparing trusts and corporations, this paper examines governance at a more fundamental level and exploits heterogeneity in corporate and trust fiduciary duties. The results have implications for corporate governance design, suggesting that heightened fiduciary duties can enhance investor protection by mitigating agency conflict and managerial risk taking, though at the possible cost of inferior risk‐adjusted performance.</jats:italic></jats:p></jats:sec>
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spelling Warburton, A. Joseph 1472-0701 Emerald Business, Management and Accounting (miscellaneous) http://dx.doi.org/10.1108/14720701111176957 <jats:sec><jats:title content-type="abstract-heading">Purpose</jats:title><jats:p><jats:italic>The purpose of this paper is to explore whether fiduciary duties impact the behavior of firm insiders. Trust law imposes stricter fiduciary obligations on insiders than corporate law does. This paper seeks to examine whether the difference in fiduciary duties impacts agency conflict, performance, and/or risk taking.</jats:italic></jats:p></jats:sec><jats:sec><jats:title content-type="abstract-heading">Design/methodology/approach</jats:title><jats:p><jats:italic>The paper takes an empirical approach to answering the question by comparing mutual funds organized as trusts and as corporations. The existence of these two types of organizations within the same industry offers a unique laboratory for the study of the effects of fiduciary duties.</jats:italic></jats:p></jats:sec><jats:sec><jats:title content-type="abstract-heading">Findings</jats:title><jats:p><jats:italic>Mutual funds organized in trust form charge significantly lower fees and take on less risk than equivalent mutual funds organized in corporate form. Evidence also suggests that the trusts tend to under‐perform their corporate counterparts, even after adjusting for differences in risk.</jats:italic></jats:p></jats:sec><jats:sec><jats:title content-type="abstract-heading">Originality/value</jats:title><jats:p><jats:italic>Much of the existing literature on firm governance and investor protection focuses on the corporation and, hence, takes organizational form as a given. By comparing trusts and corporations, this paper examines governance at a more fundamental level and exploits heterogeneity in corporate and trust fiduciary duties. The results have implications for corporate governance design, suggesting that heightened fiduciary duties can enhance investor protection by mitigating agency conflict and managerial risk taking, though at the possible cost of inferior risk‐adjusted performance.</jats:italic></jats:p></jats:sec> Do fiduciary duties matter? Corporate Governance: The international journal of business in society
spellingShingle Warburton, A. Joseph, Corporate Governance: The international journal of business in society, Do fiduciary duties matter?, Business, Management and Accounting (miscellaneous)
title Do fiduciary duties matter?
title_full Do fiduciary duties matter?
title_fullStr Do fiduciary duties matter?
title_full_unstemmed Do fiduciary duties matter?
title_short Do fiduciary duties matter?
title_sort do fiduciary duties matter?
title_unstemmed Do fiduciary duties matter?
topic Business, Management and Accounting (miscellaneous)
url http://dx.doi.org/10.1108/14720701111176957