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Who cares about financialization? Explaining the decline in political salience of active markets for corporate control

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  • Callaghan, Helen

Abstract

Why is unprecedented financialization failing to provoke a strong political backlash? The role of financial markets, motives, actors, and institutions has expanded continuously in recent decades, but - contrary to Polanyi's 'double movement' theory and despite the current financial crisis - market-containment efforts have grown weaker over time. The present paper approaches this puzzle by explaining how the practice of corporate takeover bids gradually gained political acceptance in the United Kingdom from the 1950s onward. Through its expansion, the market for corporate control contributed directly to eroding political resistance by triggering processes of routinization, adaptation, and elimination. Routinization decreases issue salience for 'average voters' because it lowers the news value of takeover bids. Adaptation to new profit opportunities increases the number of beneficiaries from takeover bids, thereby bolstering promarket clienteles. Elimination of stakeholder-oriented companies - through constant exposure to takeover threats - demoralizes the opponents of active markets for corporate control by leaving them with less to fight for. Empirical evidence is drawn mainly from qualitative and quantitative analysis of British parliamentary debates regarding takeover bids between 1953 and 2011.

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  • Callaghan, Helen, 2013. "Who cares about financialization? Explaining the decline in political salience of active markets for corporate control," MPIfG Discussion Paper 13/4, Max Planck Institute for the Study of Societies.
    • Handle: RePEc:zbw:mpifgd:134
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    1. Robert Boyer, 2005. "From Shareholder Value to CEO Power: the Paradox of the 1990s," Post-Print halshs-00754109, HAL.
    2. Robert Boyer, 2005. "From shareholder value to CEO power: The paradox of the 1990s," PSE Working Papers halshs-00590848, HAL.
    3. Steve Thompson, 2005. "The Impact of Corporate Governance Reforms on the Remuneration of Executives in the UK," Corporate Governance: An International Review, Wiley Blackwell, vol. 13(1), pages 19-25, January.
    4. Robert Boyer, 2005. "From shareholder value to CEO power: The paradox of the 1990s," Working Papers halshs-00590848, HAL.
    5. Helen Callaghan & Paul Lagneau-Ymonet, 2012. "The phantom of Palais Brongniart : economic patriotism and the Paris Stock Exchange," Post-Print hal-01519920, HAL.
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    Cited by:

    1. Helen Callaghan, 2015. "Something left to lose? Network preservation as a motive for protectionist responses to foreign takeovers," Review of International Political Economy, Taylor & Francis Journals, vol. 22(2), pages 391-418, April.
    2. Detzer, Daniel, 2019. "Financialization made in Germany: A review," IPE Working Papers 122/2019, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    3. Klüh, Ulrich & Hütten, Moritz, 2016. "No more cakes and ale: banks and banking regulation in the post-bretton woods macro-regime," MPRA Paper 72357, University Library of Munich, Germany.

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