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87 Wash. U. L. Rev. 115 (2009-2010)
Trust & Transparency: Promoting Efficient Corporate Disclosure through Fiduciary-Based Discourse

handle is hein.journals/walq87 and id is 117 raw text is: TRUST & TRANSPARENCY: PROMOTING EFFICIENT CORPORATE DISCLOSURE THROUGH FIDUCIARY-BASED DISCOURSE MICHAEL R. SIEBECKER ABSTRACT Could embracing the philosophy of encapsulated trust as the basis for afiduciary duty of disclosure improve the integrity and effectiveness of corporate communications? The question arises because a tragedy of transparency threatens the viability of the burgeoning corporate social responsibility (CSR) movement, where consumers and investors employ various social, environmental, or ethical screening criteria before purchasing a company's stock or products. In an efficient market, fully informed consumers and investors could reward companies that engage in CSR by purchasing their products or stock and, conversely, punish companies that fail to engage in desired practices by refusing to purchase their products or stock. Unfortunately, corporations are increasingly engaging in a sort of strategic ambiguity in their public communications-an ambiguity made possible by a variety of static yet inconsistent standards regarding the collection, auditing, and dissemination of information regarding CSR practices. Consumers and investors simply cannot trust the existing disclosure regime to provide reliable information necessary to monitor CSR compliance. That lack of trust will cause the market for CSR to collapse, as consumers and investors stop offering rewards for responsible business behavior. The Article suggests solving that disclosure tragedy by using the philosophy of encapsulated trust to reshape the existing fiduciary duties governing officers and directors. In simple terms, encapsulated trust constitutes a rational expectation that others will take our interests into * Associate Professor, University of Florida College of Law. B.A., Yale University; J.D., LL.M., M.Phil., Ph.D., Columbia University. I appreciate all the wonderfully helpful comments and suggestions that I received during presentations of prior versions of this paper at The Wharton School of Business, Washington University School of Law, Cambridge University, and Monash University. For particularly probing critical insights, I express special thanks to Rebecca Hollander-Blumhoff, Sam Buell, Adrienne Davis, Mark Fenster, Raine Isaksson, Ronald Levin, Andrea Matwyshyn, Neil Richards, Paul M. Schwartz, Jeremy Waldron, Walter Weyrauch, Cynthia A. Williams, and Robert J. Wolf. For careful research support, I remain deeply indebted to my extraordinary assistants, Christopher Deem and Dustin Hall.