Corporate Governance Adrift

Corporate Governance Adrift

A Critique of Shareholder Value

The Cournot Centre series

Michel Aglietta and Antoine Rebérioux

Recent corporate governance scandals have brought to the fore the inherent contradictions of a capitalism dominated by financial markets. This challenging book by Michel Aglietta and Antoine Rebérioux argues that capitalism’s basic premise – that companies must be managed in the sole interest of their shareholders – is incongruent with the current environment of liquid markets, profit-hungry investors and chronic financial instability. The authors advocate rather that a company should be managed as an institution where common objectives are developed for all stakeholders, and that this democratic principle should be extended to the management of collective savings to reduce macro-financial instability. These two conditions, they contend, could make contemporary capitalism a vehicle for social progress.

Foreword

Michel Aglietta and Antoine Rebérioux

Subjects: business and management, corporate governance, economics and finance, corporate governance, financial economics and regulation, industrial organisation

Extract

The book that the reader is about to discover is the fruit of several years’ preoccupation. Its origin goes back to a project of collective research launched in 1999, on behalf of the Commissariat Général du Plan. One of the authors coordinated this research; the other gave it major impetus. Four research centres participated in the project: the FORUM in Nanterre, the IDEFI in Nice, the INSEAD in Fontainebleau and the CPDR of the Catholic University of Louvain. This research culminated in a report published in September 2001 and entitled: Régimes de gouvernements d’entreprise: différences nationales et stratégies d’entreprise (‘Corporate Governance Regimes: National Differences and Corporate Strategies’). From this period on, we became mistrustful of the dominant ideology – a skilful mixture of legal and economic theory – championed by AngloAmerican consulting firms, the larger investment banks and certain academic circles. In the euphoric atmosphere of large-scale stock market speculation and the golden age that the ‘new economy’ was expected to bring, the shareholder was king. Creation of shareholder value established itself as the pillar of a new form of governance, guaranteeing uninterrupted prosperity for the economy as a whole, including workers. There was no doubt, according to the enthusiastic promoters of this doctrine, that the whole world would convert to it. Globalization of the economy, by exerting its influence on the firm itself, would penetrate deeper strata than the level of the capital markets alone. In the report cited above, we expressed doubts about...