The Legacy of Shareholder Value Capitalism

American society has now been living in the wake of shareholder value capitalism for four decades. The shareholder value movement began as an invasion of the market for corporate control by financially oriented investors who critiqued sitting managers as not paying sufficient attention to the intere...

Full description

Saved in:
Bibliographic Details
Published inAnnual review of sociology Vol. 48; no. 1; pp. 193 - 211
Main Authors Fligstein, Neil, Goldstein, Adam
Format Journal Article
LanguageEnglish
Published Palo Alto Annual Reviews 01.01.2022
Annual Reviews, Inc
Subjects
Online AccessGet full text

Cover

Loading…
More Information
Summary:American society has now been living in the wake of shareholder value capitalism for four decades. The shareholder value movement began as an invasion of the market for corporate control by financially oriented investors who critiqued sitting managers as not paying sufficient attention to the interests of shareholders during the economic crisis of the 1970s. It altered the relationship between financial markets and the managers of publicly held corporations. Subsequently, publicly held corporations have worked to raise share prices any way they can. While managers initially resisted shareholder value initiatives, they came to embrace them when their pay became tied to the share price. This created an incentive to discover new forms of financial extraction whenever a given set of strategies stopped producing new gains. We consider the impact that these reorganizations had on inequality and the relationship between shareholder value capitalism and financialization. We end by discussing the continuing relevance of shareholder value for understanding contemporary American capitalism. We also identify several avenues for future research on the evolution and consequences of shareholder value in the twenty-first century.
ISSN:0360-0572
1545-2115
DOI:10.1146/annurev-soc-030420-120827