Fiduciary Duties as Residual Claims: Obligations to Non-shareholder Constituencies from a Theory of the Firm Perspective

Abstract

This Article intends to reconcile two competing paradigms within the law and economics model of corporate governance. The first paradigm, which has its intellectual origins in the work of Ronald Coase, holds that the modern, publicly held corporation is a nexus of contracts among the company's various contributors. The term "nexus of contracts" has become a revolutionary banner that has "transformed not only our understanding of the law, but the law itself."