摘要：This article clarifies why optimal corporate governance generally excludes monetary liability for breach of directors’ and managers’ fiduciary duty of care. In principle, payments predicated on third-party investigations of directors’ and managers’ business decisions could usefully supplement payments predicated on stock prices or accounting figures in the provision of performance incentives, including risk-taking incentives. Consequently, the reason not to use liability incentives is not absolute but a cost-benefit trade-off: Litigation is expensive, while the benefits from refining incentives are limited. The analysis rationalizes many existing exceptions from non-liability but also leads to novel recommendations, particularly for entities other than public corporations.
