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Elucidating Limited Shareholder Engagement: Identifying Ethical and Epistemological Factors in the Fiduciary

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  • Helen Mussell

Abstract

The legal concept of fiduciary, from the Latin fiducia meaning trust, plays a fundamental role in all financial and business organisations: it acts as a moral safeguard of the relationship between trustee and beneficiary, ensuring that the beneficiaries' best interests are met. It is often referred to as a duty of care. This paper focuses on the ethics of the fiduciary, but from a unique and historical perspective, going back to the original formulation of the fiduciary within a familial context, to reveal not only why care plays a central role in the fiduciary, but to also uncover key foundational presuppositions regarding agential capabilities embedded in the trustee-beneficiary relationship. In doing so, the paper uncovers ethical issues of an epistemological kind at the core of the fiduciary. By using Miranda Fricker's theory of pre-emptive testimonial injustice, the analysis helps shed light on shareholder activism and explains limited engagement to date.

Suggested Citation

  • Helen Mussell, 2019. "Elucidating Limited Shareholder Engagement: Identifying Ethical and Epistemological Factors in the Fiduciary," Working Papers wp516, Centre for Business Research, University of Cambridge.
    • Handle: RePEc:cbr:cbrwps:wp516
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    References listed on IDEAS

    as
    1. Benjamin J. Richardson, 2011. "From fiduciary duties to fiduciary relationships for socially responsible investing: responding to the will of beneficiaries," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 1(1), pages 5-19, February.
    2. Steve Lydenberg, 2014. "Reason, Rationality, and Fiduciary Duty," Journal of Business Ethics, Springer, vol. 119(3), pages 365-380, February.
    3. Joakim Sandberg, 2011. "Socially Responsible Investment and Fiduciary Duty: Putting the Freshfields Report into Perspective," Journal of Business Ethics, Springer, vol. 101(1), pages 143-162, June.
    4. Combs, Mary Beth, 2005. "A Measure of Legal Independence”: The 1870 Married Women's Property Act and the Portfolio Allocations of British Wives," The Journal of Economic History, Cambridge University Press, vol. 65(4), pages 1028-1057, December.
    5. Goodman, Jennifer & Arenas, Daniel, 2015. "Engaging Ethically: A Discourse Ethics Perspective on Social Shareholder Engagement," Business Ethics Quarterly, Cambridge University Press, vol. 25(2), pages 163-189, April.
    6. Helen Mussell, 2018. "Who Dares to Care? (In the World of Finance)," Feminist Economics, Taylor & Francis Journals, vol. 24(3), pages 113-135, July.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Fiduciary duty; Epistemic Injustice; Ethics of Care; Shareholder Activism; Power; Gender; Beneficiary; Trustee;
    All these keywords.

    JEL classification:

    • B54 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Feminist Economics
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics

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