The idea that a corporation should be managed for the benefit of its shareholders, also known as "fiduciary duty", arose as a reaction to snake-oil salesmen of

The idea that a corporation should be managed for the benefit of its shareholders, also known as "fiduciary duty", arose as a reaction to snake-oil salesmen of the 19th century who would sell interests in phantom companies and run off with the money. The advantage of such a principle is that it tends to be fairly clean cut and easy to judge when someone has violated it. If we allow managers to work by some other standard, such as balancing the interests of all stakeholders, it becomes very easy for them to find some weak justification for any wrongdoing or defrauding of their shareholders.