Stock markets and financial capitalism

Authored by: Andrew Smith , Kevin D. Tennent

The Routledge Companion to Business History

Print publication date:  December  2016
Online publication date:  December  2016

Print ISBN: 9780415855563
eBook ISBN: 9780203736036
Adobe ISBN: 9781135007836

10.4324/9780203736036.ch8

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Abstract

This chapter examines the historical relationship between corporate governance and finance by examining the historical development of financial capitalism and the stock market, with a view to demonstrating the contemporary relevance of business-historical research on this topic. In recent years, academics, policymakers and businesspeople have debated the complex relationship between financialization, corporate governance and the ideology of shareholder value (Westlake, 2013, pp. 326–343). Many academics blame financialization and the rise of shareholder value ideology for a range of ills that include the post-1980 stagnation in US median living standards, the wave of scandals that prompted the passage of the Sarbanes-Oxley Act, and the Global Financial Crisis of 2007–9 (Dore, 2008; Lazonick, 2011). The intensification of cross-border M&A activity involving countries with very different corporate governance systems, such as the famously ill-fated DaimlerChrysler merger, also focused attention on comparative corporate governance (Gilson, 2001; Martynova and Renneboog, 2011; Sudarsanam and Broadhurst, 2012). The ongoing battles over corporate governance are intense because the right to control a sizeable proportion of GDP is at stake (Gourevitch and Shinn, 2005). In sum, corporate governance is one of the major issues confronting our time.

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