Corporate financialisation: a conceptual clarification and critical review of the literature

dc.contributor.authorReddy, Niall
dc.contributor.authorRabinovich, Joel
dc.date.accessioned2024-06-11T07:34:00Z
dc.date.available2024-06-11T07:34:00Z
dc.date.issued2024-05
dc.departmentSouthern Centre for Inequality Studies SCIS
dc.description.abstractCorporate financialisation (CF) comprises a major field of financialisation studies centred on the belief that significant changes in corporate governance and business models have been driven by financial imperatives, which have had a profound impact on investment habits, labour policies, organisational practices and the distribution of revenues. Experiencing explosive growth in recent years, this field has become mired in conceptual ambiguity, mirroring problems with financialisation studies as a whole. While seeking to restore some conceptual clarity and clearly delineate the boundaries of the concept, this paper offers a detailed review of empirical work on CF. At the core of the field, we identify four sub-theories, each addressing distinct aspects of the way business models have become financialised under the influence of shareholder value principles. Our dissection of the literature shows, however, that these theories mostly remain under-substantiated. The connection of financialisation strategies to key outcomes of interest, such as declining investment and rising inequality, remains nebulous in most cases. Beyond this, we identify key weaknesses in the way shareholder value orientation – the causal lynch pin of CF accounts – has been theorised. The field as a whole has paid insufficient attention to the variegated and uneven nature of the shareholder revolution, which has prevented a single uniform set of governance principles from diffusing. We also argue that the tendency to dilute definitions of corporate financialisation across explanans and explanandum has masked problems of verification. The critique concludes with a call for conceptual clarity and more care in distinguishing financialisation from causal channels associated with other structural dynamics, such as monopolisation.
dc.description.submitterPM2024
dc.facultyFaculty of Commerce, Law and Management
dc.identifier.citationRabinovich, J. & Reddy, N. (2024, May) Corporate financialisation: a conceptual clarification and critical review of the literature. (SCSI Working paper No. 66). Johannesburg: Southern Centre for Inequality Studies. https://hdl.handle.net/10539/38628
dc.identifier.urihttps://hdl.handle.net/10539/38628
dc.language.isoen
dc.publisherSouthern Centre for Inequality Studies
dc.publisherUniversity of the Witwatersrand, Johannesburg
dc.rights© 2024 Southern Centre for Inequality Studies.
dc.schoolSouthern Centre for Inequality Studies
dc.subjectCorporate finance
dc.subjectCorporate governance
dc.subjectBusiness models
dc.subjectInvestment
dc.subject.otherSDG-17: Partnerships for the goals
dc.titleCorporate financialisation: a conceptual clarification and critical review of the literature
dc.typeWorking Paper
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