What is a consequence of breaching fiduciary duty?

Breaching fiduciary duty leads to legal action and potential penalties because fiduciary duty represents a legal and ethical obligation that individuals, particularly in positions of trust, have to act in the best interests of another party. When this duty is breached, the affected party, such as shareholders, can seek legal remedies, which may include lawsuits for damages or seeking other forms of restitution. This legal recourse serves to uphold the integrity of fiduciary relationships and to deter individuals from acting against the interests of those they are obligated to protect.

The other options present outcomes that are generally not associated with fiduciary breaches. Increased shareholder approval, enhanced corporate reputation, and increased corporate profits are unlikely results of failing to honor fiduciary duties, as such breaches typically undermine trust and could lead to negative repercussions for the organization and its leaders.