\u201c<\/em>Although a shareholder may be part owner of a corporation, he generally has no control over the day-to-day management of the corporation. The board of the directors and the officers have direct control over the corporation, and therefore they owe fiduciary duties<\/strong> to the owners, who are the shareholders.<\/em>.\u201d<\/em><\/p>\n [The Houston Chronicle<\/a>]<\/span><\/span><\/p>\n Why is this important? An indication is given in the quotation below (relevant for listed enterprises, even though the first part refers to banks in particular)<\/p>\n \u00abFifty years ago in the US and Europe people who needed financial advice turned instinctively to their bank manager, who was a respected member of the community with good local knowledge. He – and it invariably was a he – would steer a client away from one product towards another even if doing so would lead to a lesser profit for the bank. The underlying assumption was that selling a product that was right for the client’s personal circumstances regardless of its profitability for the bank was in the long-run interests of the bank and its shareholders as well as those of the client..<\/em><\/p>\n Everything changed in the 1980s with the shareholder value revolution<\/u><\/strong>. People in quoted companies from the chief executive officer down came under much greater pressure to increase earnings on an annual, half yearly and quarterly basis. The result was that the bankers’ fiduciary obligation to look after the client’s interest came into potential conflict with the short-term interest<\/u> of share-holders<\/strong>. The conflict was greatly exacerbated by the introduction of sales targets and incentive rewards for employees, together with stock option and other equity-related awards.<\/em><\/p>\n .. The requirement for quarterly reporting bred a “hitting the numbers” culture<\/strong>. Chief executives who failed to meet the market’s expectations could find themselves in the ejector seat as the share price collapsed. In the English-speaking countries the CEO’s average tenure came down to as little as three or four years.\u00bb<\/em><\/p>\n John Plender and Avinash D. Persaud (2007: 53-54,8-9): All you need to know about Ethics and Finance-Finding a moral compass in business today. <\/em>[Emphasize added]<\/span><\/p>\n Kelly and Howard (2019) \u00a0refers to the consequences of \u2018fiduciary duty\u2019) as follows:<\/p>\n \u00a0<\/em>\u201c<\/strong><\/p>\n Today, 40 percent of jobs in the US are insecure, part-time, contract, gig-economy-type work, and even those jobs are disappearing in the face of offshoring and automa\u00adtion. We’re getting these precarious jobs because of the systems natural functioning. The reality is that the pursuit of profits often means hold\u00ading down wages\u2014and that’s a feature, not a bug.<\/em><\/p>\n In fact, we haven’t fully confronted the fact that corporations believe they have a fiduciary duty to systematically suppress labor and labor income\u2014and weaken environ\u00admental regulation\u2014in order to increase profit for wealthy shareholders. <\/u>\u00a0\u00a0<\/em><\/p>\n When the first moral duty is a fiduciary duty to maximize returns on investments, in effect it becomes the only duty, requiring all other concerns\u2014the well-being of communi\u00adties, employees, and the environment\u2014to be justified in terms of impact on capital.<\/strong><\/em><\/p>\n \u201d<\/strong><\/p>\n (Marjorie Kelly and Ted Howard (2019:6,24-25): The Making Of a Democratic Economy.\u00a0 Building Prosperity for the Many, Not Just the Few<\/em>, emphasize added)<\/span><\/p>\n <\/p>\n This Barnes (2015) presents, proposing what he terms \u2018common wealth trusts\u2019, introduced us to as follows:<\/p>\n \u00abWe all know what private wealth is: stocks, bonds, real estate, and so on (..) By con\u00adtrast, we barely notice our common wealth<\/strong>, which is a much richer trove. It in\u00adcludes the vast gifts of nature, including sources and sinks, along with socially created institutions with\u00adout which large-scale enterprise could not flourish.<\/em><\/p>\n Con\u00adsi\u00adder what would happen, for instance, if the Internet stopped functioning: all of the businesses that depend on it would suddenly have little value on their own. The same is true for our energy, transportation, and financial systems. It is common wealth that creates most of the value of pri\u00advate wealth.<\/em><\/p>\n Common wealth, by right, belongs to everyone equally. However, markets currently do not acknowledge such wealth or recognize its value, much less its common ownership. Because of this enormous market failure, private businesses take, use, or pollute common wealth without limit, generally without paying its right\u00adful owners for the pri\u00advi\u00adlege. <\/strong><\/em><\/p>\n By so doing, private businesses and their narrow group of owners capture much of the value added by common wealth, exacerbating inequality. If businesses had to pay for the use of common wealth, these things would not happen, or at least would happen much less. What are now unpriced exter\u00adnal\u00adi\u00adties or straight-out thefts would become costs for businesses that could generate income for everyone.\u00bb<\/strong><\/em><\/p>\nAnother take on Fiduciary Duties: Fiduciary Responsibility to Future Generations<\/h3>\n