Hiding in plain sight: the concept of fiduciary duty in financial economics

We discuss the role of fiduciary duty in financial economics. We first demonstrate that there are different levels of depth of engagement with the content of the definition of fiduciary duty in the financial literature. Most contributors tacitly presume a narrow definition of fiduciary duty or merely mention it in passing. Only some authors provide more detailed definitions. And very few authors explicitly discuss the values at play in different definitions of fiduciary duty. The concept of fiduciary duty, while a key normative assumption underlying investment practice, seems to hide in plain sight in the current debates. We argue that deeper engagement with the concept of fiduciary duty is desirable. Such deeper engagement improves conceptual clarity, comparability across analyses, and transparency about normative assumptions. Doing so also contributes to responsible financial economics understood as the obligation to make normatively consequential assumptions explicit.