Corporate Governance Adrift
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Corporate Governance Adrift

A Critique of Shareholder Value

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.
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Chapter 4: Corporate Governance Regimes

Michel Aglietta and Antoine Rebérioux


Chapter 2 presented a critique of the theoretical and normative foundations of shareholder value. We described the reasons for the difficulties generated by shareholder control over managers. This brought out the idea that the firm is a collective entity coordinating numerous different skills and functions that are very imperfectly contractualized. Because there are multiple interests vested in the firm, the search for a collective interest is essential for directing the coordination of its activities. The managerial firm necessarily possesses a centre of policy management. This is the seat of power, and it is subject to the influences of the interests connected with the firm through different types of incomplete contracts. A range of different governance regimes therefore exists, depending on the configuration of the interactions between the different interests vested in the firm. In Chapter 3, we demonstrated that this diversity does indeed exist. The connection of interests in the firm is codified by three sources of law: financial market, corporate and labour. Their relative influence differs greatly between the United States and continental Europe. Any serious study must therefore distinguish between the rhetoric of shareholder value and the governance principles that are actually implemented by firms. It is the legal rules underlying these principles which give each country its dominant characteristics. The extraordinary rise in stock market prices during the 1990s enriched shareholders enormously. However, finding a causal link between the concomitance of the stock market boom and the...

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