Decades of corporate greed, personal misconduct with risk taking eroded trust in corporate decision-making has resulted in the lack of confidence by stakeholders in American corporations. Restoring trust requires that the board of directors comply with requirements for greater accountability and transparency. Directors are legally bound, as stated by the Delaware Supreme Court, as fiduciaries are owing duties of care and loyalty, due care, and good faith the stakeholders and the wider society. Recent case law affirms that the duty of loyalty requires boards to act in good faith. The Sarbanes- Oxley Act and the Dodd–Frank Act require that directors protect the interests of the company and its stockholders, and refrain from risky decisions …show more content…
The primary fiduciary duty is the duty of loyalty. Therefore, the company should not engage in transactions that involve risk or a conflict of interest. In recent years many Corporate directors have jumped on the Corporate Social Responsibility bandwagon as a personal pet project and did not consider whether it is for the good of the stakeholders. A corporate executive is an employee of the owners of the business. He has direct responsibility or duty of care to his employers. The responsibility is to maximize profits for their company 's shareholders. Corporate directors also owe stakeholders a duty of care that is to say, a duty to make informed decisions for the benefit of the stakeholders. During the recent financial crisis, there was so much risk taken by greedy managers that when stakeholders lost money and it was revealed Directors were getting rich by the decisions then in response legislation had to address the need for increased risk assessment in our financial institutions, requiring increased disclosure to ensure that Directors would act morally, ethically and