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.

Chapter 1: Finance-led Capitalism: An Inventory

Michel Aglietta and Antoine Rebérioux

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


The starting point of this book lies in an observation: the rise to power of market finance since the mid-1970s has radically altered the characteristic traits of contemporary capitalism. This process of ‘financialization’ is driven by two movements. The first is the growth in the liquidity of capital markets, expressing increases in the breakdown and transfer of risks. The second is the upsurge, in these same markets, of investment funds, responsible for the management of continually increasing savings. Far from remaining limited solely to the financial sphere, these changes have profoundly affected listed companies, the main players in the world economy. In this respect, the ideology of ‘shareholder value’1 has played and continues to play an essential role. The concept of ‘finance-led capitalism’ can be used to describe this new growth regime, in which a decisive role is given to the profitability of stock market assets, in both the creation and distribution of value added. Our aim here is to grasp the principal moving forces behind this ‘finance-led capitalism’, in other words to understand not only the regularities which maintain its functioning, if not its durability, but also its most widely recognized weaknesses – factors of instability. To this end, we concentrate on two questions. The first deals with the dynamic induced by the continual expansion of risk transfer in the financial markets. The second explores corporate governance, and the governance of listed companies in particular. The term ‘governance’ covers all the measures, procedures, institutions and practices that determine...

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