Let’s not blame directors for not fulfilling their fiduciary duties and causing corporate failure. It’s not really their fault; they’re simply playing by the rules. Our directors and managers live by a shareholder-centric governance model that forces them to behave in a certain way. They believe that maximising shareholder value is the number one priority of boards and managers. Shareholders are "owners" and boards and managers are "agents". They accept as true that shareholders own the corporation and, by virtue of their status as owners, have ultimate authority over its activities and may legitimately demand that the board and management, as agents, conduct corporate activities in accordance with their wishes. This notion is otherwise known as agency theory or the agency model of corporate governance and is now seen as the root cause of most corporate failures — and for the global financial crisis of 2008. Milton Friedman spawned the theory in 1970 and Michael Jensen and William M...

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