TY  - JOUR
AB  - Purpose–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.Design/methodology/approach–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.Findings–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.Originality/value–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.
VL  - 11
IS  - 5
SN  - 1472-0701
DO  - 10.1108/14720701111176957
UR  - https://doi.org/10.1108/14720701111176957
AU  - Warburton A. Joseph
ED  - Lutgart Van den Berghe
ED  - Abigail Levrau
ED  - Naomi Chambers
ED  - Joris‐Johann Lenssen
PY  - 2011
Y1  - 2011/01/01
TI  - Do fiduciary duties matter?
T2  - Corporate Governance: The international journal of business in society
PB  - Emerald Group Publishing Limited
SP  - 541
EP  - 548
Y2  - 2024/09/21
ER  -