Investing prudently: How financialization puts a legal standard to use

Montagne, Sabine

doi:10.1016/j.soctra.2013.08.001

Cited by 25 publications

(2 citation statements)

References 19 publications

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“…From the 1970s on, a combination of various factors paved the way to what Hyman Minsky called "money manager capitalism" (e.g., Whalen, 2001). This multifold process of transformation of finance was unleashed by the deployment of asset management strategies oriented toward diversification in the 1970s (Montagne 2013) and the tightening of global monetary conditions, following the "1979 coup" by the US FED (Duménil and Lévy 2004). A decade later, the dismantlement of capital controls accelerated the diffusion of the SVO in coordinated market economies like France, Germany, and Japan (Ahmadjian and Robbins 2005;Lantenois and Coriat 2011;Morin 2000) and, more broadly, reinforced the power of finance due to the deepening of global liquidity (Orléan 1999).…”

Section: The Shareholder Orientation Of Corporate Governance and The Rise Of Financial Investorsmentioning

confidence: 99%

Corporate financialization’s conservation and transformation: from Mark I to Mark II

Auvray

Durand

Rikap

2021

Rev Evol Polit Econ

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This paper argues that, as far as the investment behavior of non-financial corporations is concerned, the apparent continuity over the last four decades suggested by the corporate financialization label is misleading. Indeed, while the disconnection between profitability and investment is a robust stylized fact for most of the period, with cumulative detrimental consequences for labor, we contend that the underlying mechanisms changed meaningfully at the turn of the millennium. This contribution identifies—empirically and theoretically—two distinct successive corporate financialization regimes (Mark I and Mark II) and explains their evolutionary articulation. Financialization Mark I is characterized by the empowerment of financial actors: in a context of high interest rates and full-blown liberalization, diminishing retained earnings by non-financial corporations resulted in a dramatic slowdown of investment. Contrastingly, Financialization Mark II is characterized by a strongly established financial hegemony with new forms of intellectual and financial monopoly. In this configuration, interest rates are low and global value chains are deeply seated. This fuels rampant deflationary pressure, which changes the overall dynamic of the profit-investment nexus. Then, in Financialization Mark II, contrary to what occurred during Financialization Mark I, distributed profits are the consequence of slow investment.

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Section: The Shareholder Orientation Of Corporate Governance and The Rise Of Financial Investorsmentioning

confidence: 99%

Corporate financialization’s conservation and transformation: from Mark I to Mark II

Auvray

Durand

Rikap

2021

Rev Evol Polit Econ

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“…By the mid-1980s, however, the share of equity owned directly by private pension funds began to rapidly fall as mutual funds started to gain significant presence in the stock market, surpassing pension funds as the largest shareholder in the late-1990s. Braun (2021) suggested that the rapid growth of mutual funds can be partly attributed to the reorganization of the U.S. investment chain following the introduction of new fiduciary requirements to the Employment Retirement Income Security Act (ERISA) in 1979, which necessitated that pension funds follow the prescriptions of modern portfolio theory in their investment decisions (Montagne, 2013). Following these stricter requirements, from the 1980s onward pension funds were incentivized to outsource the management of retirees’ savings to professional asset managers instead of directly investing in the stock market themselves (van der Zwan, 2017).…”

Section: The Rise Of Us Asset Managersmentioning

confidence: 99%

Who owns and controls global capital? Uneven geographies of asset manager capitalism

Gibadullina

2023

Environ Plan A

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Since the 1980s, U.S. finance has grown disproportionately in power and influence as American investment funds have become the largest shareholders of U.S. corporations, managing tens of trillions of dollars in investments. This paper provides a novel empirical analysis of the ascent of asset manager capitalism in the United States and explores the extent of its global spread by examining the SEC Form 13F filings of U.S. institutional investors along with an extensive global corporate ownership dataset provided by Orbis. This paper finds that U.S. finance owns approximately 60% of U.S. listed companies (an increase from 3% in 1945) and 28% of the equity of all globally listed firms. As the largest global shareholders and the exemplars of U.S. asset managers, the Big Three hold investments in 81% of U.S. listed companies and own 17% of the U.S. equity market, while also appearing as a shareholder in 20% of non-U.S. listed companies and owning 4% of the non-U.S. equity market. This paper illustrates that the ascent of the age of passive investment and universal ownership, exemplified by the activities of the Big Three, has produced a sectorally and geographically uneven landscape of capital flows, exacerbating the existing divides between the heartlands and hinterlands of global financial markets. With the ownership of listed companies being increasingly concentrated in the hands of a small number of increasingly powerful funds, this paper ultimately argues that it is in the ownership of the majority of global capital that the power of modern finance lies.

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The American Political Economy

Hacker

Hertel‐Fernandez

Pierson

et al. 2021

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This volume brings together leading political scientists to explore the distinctive features of the American political economy. The introductory chapter provides a comparatively informed framework for analyzing the interplay of markets and politics in the United States, focusing on three key factors: uniquely fragmented and decentralized political institutions; an interest group landscape characterized by weak labor organizations and powerful, parochial business groups; and an entrenched legacy of ethno-racial divisions embedded in both government and markets. Subsequent chapters look at the fundamental dynamics that result, including the place of the courts in multi-venue politics, the political economy of labor, sectional conflict within and across cities and regions, the consolidation of financial markets and corporate monopoly and monopsony power, and the ongoing rise of the knowledge economy. Together, the chapters provide a revealing new map of the politics of democratic capitalism in the United States.

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Investing prudently: How financialization puts a legal standard to use

Cited by 25 publications

References 19 publications

Corporate financialization’s conservation and transformation: from Mark I to Mark II

Corporate financialization’s conservation and transformation: from Mark I to Mark II

Who owns and controls global capital? Uneven geographies of asset manager capitalism

The American Political Economy

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