Markus Kallifatides

Corporate Governance in Modern Financial Capitalism

This insightful book focuses upon corporate governance processes, and explores the conditions required for effective corporate governance and control in 21st century globalized and financialized economies. In presenting a comprehensive study of a cross-border hostile corporate take-over process, describing the actors, institutions and events involved, this book examines and questions the current forms of corporate governance and control – both from a national and a global perspective. Using Old Mutual’s takeover of Skandia as a case study, the authors address corporate governance theory, and highlight its two fundamental dimensions: financial and operational flows.

Awakening giants? The politically contested modification of institutional investors

Purpose The purpose of this paper is to offer a political perspective on modifications in corporate governance regulation. In the wake of the financial crisis, the investment rationale of institutional investors is being pushed away from a focus on financial market liquidity and short-term trading. From a political perspective, this modification entails consideration both of investment horizon and of the definition of corporate value. Design/methodology/approach The paper narrates the historical policy debate on institutional investors as corporate governors. Building on this point, a conceptual framework is developed to further the understanding of the current shifts in policy debate of institutional investors as governors. Findings The authors find a strong policy impetus to move away from certain liberal market assumptions of efficient financial markets and the positive effects of privatization, toward viewing markets as institutionally embedded. Based on their knowledge of corporate governance regimes’ political economy, the authors argue that this shift brings intensified engagement of institutional investors in corporate affairs. The reasons for why and how this might be politically contested are specified. In conclusion, propositions regarding the outcome of such contestation in different national corporate governance regimes are offered. Originality/value Pointing to the predominantly European stakeholder value versus shareholder value discussion, the authors claim that the corporate governance policy debate related to intensified engagement of institutional investors in corporate affairs is still in its infancy. Their political perspective, including propositions for further elaboration, offers a contribution to further academic debate.

Finanzialization and Strategy. Narrative and numbers

Froud, Johal, Leaver and Williams’s book contains three extended case studies of the ways in which narratives of corporate strategy, finely subdivided into firm, industry and grand economic stories, are reflexively related to accounting numbers and circulated among corporate managers, analysts, consulting firms and best selling authors of how-to management books. All this takes place in an economy in which the stock-market has become an object of interest to large strata of society, slowly but surely turning the attention of almost everybody towards day-to-day movements in share prices. I felt schizophrenic about the book: in defence of my own sanity I will argue that the book is to blame, and not me. I will begin in the mode of praise. The studies of the histories of GlaxoSmithKline, Ford and General Electric all illustrate the interweaving of business, politics, media and the rest of civil society in this organizational society of ours. They do so by way of sustained empirical research, a great deal of ‘feel’ for the field, and diligence on the part of the four authors. The case studies make great reading. Overall, and quite explicitly, the main proposition of the book is that ‘shareholder value’ is a rhetoric that spurs on the formation and expression of increasingly utopian managerial visions of how radical transformations of businesses will take place and make it possible for shareholders to reap the massive rewards to come. This contrasts rather sharply with the realities of the past where the big corporations in the West have faced all sorts of constraints that make these narratives even more unrealistic. The study of GlaxoSmithKline shows clearly that the fate of ‘Big Pharma’ is predominately a question of politics. Will governments, after all the major source of finance for the pharmaceutical industry, retain their relatively one-sided generous stance towards this particular private industry, or will they attempt to socialize some of the profits generated from the practice of modern medicine? All else are details really, but financial analysis of the companies proceeds without taking that into account, focussing forever on the details rather than on the more fundamental preconditions for the business under analysis. Ford is the story of a mature, slow-growth and globally competitive industry. The authors hint at the company being in a rather dire situation with ageing plants in high-cost America. The twists and turns of management, primarily sequences of rationalizations, ventures into finance and international acquisitions respectively, do little to produce the numbers that analysts are looking for. Hence, the stock is never valued along the same lines as those of Big Pharma, for instance. Now, the analysis of Froud et al. can be underlined even more, as Ford has been posting huge losses in recent years. Managers can make many strategic moves (both in rhetoric and in practice) but they have a hard time finding strategic levers to achieve profitable growth. The study of General Electric includes an ironical non-transferable list of ‘how-to’ principles explaining the apparent, and necessarily temporary, success of GE and its CEO ‘Neutron-Jack’ Welch. The pièce de résistance of the managerial strategy of GE has been the internalization of finance into an industrial

The politicisation of macroprudential regulation: The critical Swedish case

This article explores the prospects of stabilising financialisation in Europe as a spatial-temporal fix for Anglo-American capitalism’s crisis-tendencies. We analyse the politics of (countercyclical) macroprudential regulation in the critical case study of Sweden. Here, macroprudential regulation is introduced, in contrast with much of the rest of the EU economies, in a credit boom. We find evidence of an administrative crisis, as technocrats face the political constraints on re-regulating financialised accumulation. This suggests that the conditions are ripe for a deepened administrative crisis in Europe once countercyclical macroprudential regulation is implemented.