Financialization in the Automotive Industry: Shareholders, Managers, and Salaries

Carmo, Marcelo José do; Neto, Mário Sacomano; Donadone, Júlio César

doi:10.1080/00213624.2019.1646609

Cited by 24 publications

(10 citation statements)

References 11 publications

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“…Those competing in local markets and with a greater dependency on technological innovation and fixed investment are supposedly less financialised. This has been shown by Soener (2015) in the case of the footwear industry, Do Carmo et al (2019) for the automotive sector, and Bowman (2018) for extractive industries.…”

Section: Introductionmentioning

confidence: 78%

La importancia del sector de actividad en la financiarización de las empresas. Un análisis multinivel de empresas británicas y españolas

Massó

Bruna

2020

revintsociol

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A pesar del aumento de la literatura sobre financiarización, la mayoría de las contribuciones no ofrecen una vinculación satisfactoria de los paradigmas teóricos con los datos empíricos a nivel de empresa. Además, hasta la fecha se han realizado muy pocos estudios sectoriales. El objetivo de este trabajo es cerrar esta brecha estimando la importancia de la afiliación sectorial en la financiarización de las grandes empresas en el Reino Unido y España. Dado que la definición de financiarización suele ser imprecisa y poco clara, comenzamos con una discusión de las limitaciones de los indicadores utilizados en la literatura sobre financiarización. En segundo lugar, construimos un indicador de financiarización basado en un conjunto de datos único, obtenido de los balances y las variables de las cuentas de resultados de las empresas que cotizan en los índices FTSE -100 y del mercado continuo de 2000-2015. Finalmente, y por primera vez en la literatura, hemos aplicado una metodología multinivel para estudiar las similitudes entre los patrones sectoriales estimados para España y Reino Unido. Los resultados preliminares revelan una influencia relevante del sector empresarial en la variabilidad del indicador de financiarización. El artículo propone una nueva agenda de investigación teórica y metodológica para analizar la financiarización.

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Section: Introductionmentioning

confidence: 78%

La importancia del sector de actividad en la financiarización de las empresas. Un análisis multinivel de empresas británicas y españolas

Massó

Bruna

2020

revintsociol

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“…Baranes (2017) highlighted the role of intangible assets in their capacity to ensure stable profit rates for pharmaceutical companies, while Klinge et al (2020) connected these intangible asset ratios to observations about rising debt burdens and shareholder payouts to emphasize the importance of market power and liquidity to keep the sector afloat. Regarding the automobiles sector, studies have examined the financial accounts of some of the largest companies to find that their financial activities through subsidiaries offering financing to customers became increasingly significant to support actual manufacturing and that shareholder payouts were also on the rise (Borghi et al, 2013;Carmo et al, 2019).…”

Section: Zooming In: Sectoral and Firm-level Investigationsmentioning

confidence: 99%

Whither corporate financialization? A literature review

2021

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In this paper, we review the burgeoning literature on the study of corporate financialization, distinguishing three strands of empirical, quantitative studies: (1) national-level and macro-comparative analysis, (2) sector-and firm-level analysis, and (3) econometric studies. We argue that corporations should be studied in their spatial organization.The spatial organization of the firm can be used to obscure corporate activity. Geography is not simply one of the many features of corporate structure but is key to it and therefore fundamental to shaping corporate financialization, although this is insufficiently expressed in accounting principles that provide consolidated accounts. Finally, we suggest four avenues for future studies: (1) to expand the geographical and temporal scope of research; (2) to pay close attention to how indicators are constructed; (3) to deconstruct large categories of analysis, such as 'financial assets'; (4) to systematically include liabilities in the analysis of non-financial corporations, especially in the face of the abundance of credit.

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“…The financialization process in the automotive industry, the economy and society has been taking place for at least thirty years (Froud et al, 2006) and consists of introducing the principles of maximizing shareholder value (Lazonick & O'Sullivan 2000;Fligstein, 2001;Fligstein & Shin, 2004;Carmo et al, 2019) the change in corporate control concepts moving from industrial design to financial design (Fligstein, 1990(Fligstein, , 1991, and the increasing importance of the financial market and financial institutions in the economy as a whole (Epstein, 2002). This process is considered multidimensional (Van der Zwan, 2014) because it transforms the functioning of economic systems at the macro and micro level, having an impact on at least three aspects: the increase in the significance of the financial sector in relation to the real sector, productive; the transfer of the real sector of income to the financial sector and the increase in income inequality, contributing to wage stagnation (Palley, 2008, p. 1) and in many cases, job insecurity and unemployment.…”

Section: Introductionmentioning

confidence: 99%

“…The phenomenon of financialization can be broken down into indicators, but the basic agreement between the main authors is that productive activities are increasingly less profitable than financial activities (Froud et al, 2006;Lazonick & O'Sullivan, 2000;Fligstein, 2001). The first indicator we will use is the comparison between profitability sources at Ford and Hyundai, as this indicator shows the contribution that each segment (productive and financial) has to the business as a whole (Carmo et al, 2019).…”

Section: Introductionmentioning

confidence: 99%

“…The second indicator used is that of the shareholding composition and shareholding acquisitions of the automakers, which show the growing participation of financial economic groups as their largest shareholders (Carmo et al, 2019). They are gigantic investment funds, banks and insurance companies that are on the list of the automakers' biggest investors.…”

Section: Introductionmentioning

confidence: 99%

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Multiple dynamics of financialization in the automotive sector: Ford and Hyundai cases

2020

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The financialization process in the automotive sector is growing and has affected the automakers in different ways. In this paper, we propose to study the different dynamics that involve financialization in the automotive sector by comparing Ford and Hyundai cases worldwide. To do this, we used indicators that aim to concretize the economic concept of financialization. They are the following: a comparison between sources of profitability; composition and shareholder acquisitions; business leaders; compensation payments to executives; dividend payments to shareholders; salaries and level of employment. These indicators showed a tendency of financialization in both automakers, but with different incidences in each one of these indicators. They have shown, for example, that while Ford's financial sector is more profitable than its productive sector, Hyundai's two sources of profitability are much more balanced showing significantly smaller differences than Ford's. The employment level indicator showed that while there has been a huge drop in the number of jobs at Ford in recent decades, at Hyundai there has been a reverse movement of expansion and hiring. The aim of this article is to discuss the financialization indicators in these two automakers, contributing to better knowledge about the automotive sector and collaborating with the research agenda of economic sociology and finance.

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Financialization in the Automotive Industry: Shareholders, Managers, and Salaries

Cited by 24 publications

References 11 publications

La importancia del sector de actividad en la financiarización de las empresas. Un análisis multinivel de empresas británicas y españolas

La importancia del sector de actividad en la financiarización de las empresas. Un análisis multinivel de empresas británicas y españolas

Whither corporate financialization? A literature review

Multiple dynamics of financialization in the automotive sector: Ford and Hyundai cases

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