The Embedded Firm: Corporate Governance, Labor, and Finance Capitalism

Contents......Page 6
Figures......Page 9
Tables......Page 10
Contributors......Page 11
1 Introduction: corporate governance after the ‘end of history’: investigating
the new ‘great transformation’......Page 14
Thematic overview......Page 16
Theoretical perspectives......Page 20
Conclusion......Page 25
Part I Historical trajectories of business and regulation......Page 26
I Introduction......Page 28
II Shareholder value: an aberration in the evolution of corporate law?......Page 31
III Shareholder value and corporate failure: from Enron to the crisis of 2008–2009......Page 43
IV Corporate governance after the crisis......Page 48
V Conclusion......Page 53
3 Financialism: a (very) brief history......Page 55
I Introduction......Page 73
II Trust......Page 75
III Representation......Page 82
IV Legitimacy......Page 87
V Epilogue......Page 93
I Introduction......Page 95
II Foundational corporate governance concepts in the United States......Page 98
III A brief sketch of the evolution of US corporate governance......Page 100
A Boards of directors in the age of managerialism......Page 101
B Social forces that destroyed the manageralist model of corporate governance......Page 103
IV Board engagement and the directors’ duty to be attentive......Page 109
V Conclusions......Page 115
I Introduction......Page 117
II The first wave: drawing the distinction......Page 120
III The second wave: event studies and the attempts to settle the Cary–Winter debate......Page 123
IV The third wave: post-Enron......Page 124
V Lessons from the Delaware debate......Page 128
I Introduction......Page 132
II The death of contract and the rise of finance......Page 136
A Corporations and finance......Page 137
B Transformations of capitalism and the law......Page 139
C Crisis – what crisis?......Page 140
D Re-embedding capitalism?......Page 141
A The corporation and its stakeholders......Page 142
B The corporation in a welfarist ‘mixed economy’......Page 144
C Beyond right and left?......Page 148
IV What makes and what comes after financial capitalism? (paradigm 2)......Page 150
A The place of knowledge in management......Page 151
B From individuals to organizations to networks? From industrial captains to managerial revolutionaries to the ‘end’ or ‘future' 
of management?......Page 152
C The corporation as state: corporate social responsibility in the knowledge society......Page 155
D What is the knowledge society?......Page 158
Part II New interests, new shareholder constellations, new landscapes......Page 162
I Introduction......Page 164
II PE’s worldview......Page 167
III How do private equity funds work?......Page 171
The magic of leverage......Page 172
IV The problem with the public corporation......Page 177
Today’s agency school......Page 179
V The labor–left counter-attack......Page 180
“Financialization” or pluralism redux?......Page 183
VI Conclusion: the real nature of private equity......Page 187
I Acting like owners?......Page 190
II Background to Canadian pension funds......Page 194
A Sources of revenues of pension funds......Page 196
B Investment patterns of pension funds......Page 198
A Size and concentration......Page 199
B Public and private sector plans......Page 200
C Demographics......Page 201
D Changing legal and regulatory environment......Page 202
E Economic theory......Page 204
A Monitoring and control......Page 205
B Depth, liquidity, price and volatility......Page 208
C Alternative assets and the real and paper economies......Page 210
V Conclusions......Page 215
I Introduction......Page 218
II Credit derivatives, distinguishing risk management tool from speculative market......Page 219
III Principal-agency issue......Page 225
IV Shifting externalities......Page 227
V Central counterparty clearing facilities......Page 230
VI Recommendations for point of purchase and sale......Page 233
VII Financial distress of the reference entity and implications for restructuring......Page 238
VIII Recommendations at the point of settlement and insolvency restructuring proceedings......Page 244
I Introduction......Page 246
II Background to the Directive......Page 247
III Board neutrality/level playing field......Page 250
IV Duty to employees......Page 257
V Information to employees......Page 261
VI Payments to employees......Page 264
VII Impact of ESOPs......Page 265
VIII Conclusion......Page 267
I Introduction......Page 269
A Complementarities matter......Page 270
B The difficulty of transplantation and the reality of translation......Page 272
C The relationship of law and politics......Page 273
D Ownership structures – dispersed is not necessarily optimal......Page 274
E Future research......Page 276
III Why is LLSV nonetheless important?......Page 279
A LLSV and the World Bank’s Doing Business Initiative......Page 280
B LLSV and the promotion of shareholder-oriented corporate governance......Page 283
IV Conclusion......Page 287
Part III Labor’s evolution in the new economy......Page 288
I Introduction......Page 290
II Labor and financial development since 1980......Page 292
A Wealth ownership......Page 294
B Financial occupations......Page 296
C Risk......Page 297
D Corporate governance......Page 299
III Origins of modern financial development......Page 302
IV Financial development in the past......Page 308
V The double movement in the past......Page 311
VI Double movement redux......Page 316
A Pay issues......Page 322
C Proxy access......Page 323
VII Private equity and hedge funds......Page 324
VIII Conclusion......Page 326
I Introduction......Page 331
II The growth of “worker capital”......Page 332
III Corporate governance and labor management......Page 334
IV Efficiency in productive systems: cooperation and labor management......Page 336
V Dominant stakeholders and cooperation......Page 339
VI Globalization and effective regulation......Page 342
VII Conclusions......Page 344
I Introduction......Page 346
II The growing inequality of income......Page 347
III Enforceable rules for the global labor market......Page 348
IV Guaranteeing fundamental human rights at work......Page 350
V The “social dimension” of investment agreements......Page 352
VI More effective rules for multinational enterprises......Page 354
VII Building international industrial relations......Page 357
VIII Using market and investor power......Page 358
IX The growth of financialization......Page 359
X Conclusion......Page 361
I Introduction......Page 363
A Employees as ‘citizens at work’......Page 365
B Employees as ‘stakeholders’......Page 370
C Employees as ‘human capital’......Page 375
D Employees as investors......Page 378
III Political economy of the firm: cooperation and solidarity/divergence and conflict......Page 380
A Management......Page 381
B Workers and unions......Page 383
D The political economy of the corporation......Page 385
Hypothesis 1......Page 389
Hypothesis 6......Page 390
V Conclusion......Page 391
Part IV The transnational embedded firm and the financial crisis......Page 394
I Introduction......Page 396
II How mainstream economics led to market fundamentalism......Page 399
A Self-interest does not protect the market......Page 405
B Market regulators start questioning the fundamentals......Page 408
C What do the current evaluations by market regulators teach us?......Page 409
IV Market fundamentalism and governance systems......Page 410
A Alternative governance systems......Page 414
B The Dutch corporate governance system: an example of network interaction......Page 416
C The implications of network thinking......Page 420
VI Integrating social values and reflectivity into capital market regulation......Page 421
VII Conclusion......Page 424
I Inequitable and unstable economic growth......Page 426
II Maximizing shareholder value......Page 429
III Speculation and manipulation in the explosion of executive pay......Page 437
IV Stock buybacks as “weapons of value destruction”......Page 447
V Fighting financialization......Page 451
I Introduction......Page 453
II The politics of international financial regulation......Page 455
III What is systemic risk anyway?......Page 457
IV The role of IOSCO in defining systemic risk......Page 458
Recent IOSCO deliberations on systemic risk in a transnational context......Page 461
V Implications of systemic risk for securities regulation......Page 464
VI Conclusion: IOSCO, soft law and international financial governance......Page 469
I Introduction......Page 472
II Mutual economic reliance between pension investors and corporations......Page 473
III Market changes have created a “lemming” fiduciary standard......Page 475
IV Improving pension fund governance......Page 479
V Alignment of interests among agents and service providers......Page 481
VI Six recommendations......Page 483
VII Conclusion......Page 485
Part V Conclusion......Page 488
21 Conclusion: evaluation, policy proposals and research agenda......Page 490
Index......Page 496