Sub-theme 20: Financialization and its Societal Implications: Rethinking Corporate Governance and Shareholders

Hugh Willmott
City University London & Cardiff University, United Kingdom
Emilio Marti
University of Zurich, Switzerland, & Saïd Business School, University of Oxford, United Kingdom
Jeroen Veldman
Cass Business School, City University of London, United Kingdom

Call for Papers

Financialization refers to the “increasing role of financial motives, financial markets, financial actors and financial institutions in the operation of the domestic and international economies” (Epstein, 2005, p. 3). Particularly since the 2008 financial crisis, organization scholars have become more interested in financialization (Lounsbury & Hirsch, 2010; Marti & Scherer, 2016; Riaz et al., 2011) and how financialization affects corporate behavior (Cobb, 2015) and broader society (Davis, 2009). This sub-theme creates a space to discuss how “The Good Organization” is possible in a financialized economy. We suggest that organization scholars can make a distinct contribution to our understanding of financialization by (1) analyzing the rise of a financialized approach to corporate governance and (2) exploring how different types of shareholders influence corporations.
A financialized approach to corporate governance. Over the last 40 years, a theory and practice of corporate governance came to prominence in which shareholders play a key role (Davis, 2009). A financialized approach to corporate governance follows a setup proposed by agency theory, where ‘principals’ (i.e., shareholders) are opposed to ‘agents’ (i.e., executive managers) as generic actors within a dyadic relationship (Jackson, 2000). Such approaches take for granted that shareholders are the legitimate beneficiaries of corporations and their main focus is on ensuring the free flow of relevant information or the expansion of the use of non-executive directors (Veldman & Willmott, 2016). To develop a better understanding of the rise of a financialized approach to corporate governance, we welcome submissions that focus in detail on how specific actors – such as standard setters, think tanks, political parties, professional bodies, and lobby groups – shape the discourse around corporate governance and its implementation.
Unpacking how different types of shareholders influence corporations. Financialization also revolves around the rising influence of shareholders. Over the last 40 years, mutual funds and pension funds have become more active and they have been joined by new types of shareholders, such as hedge funds or sovereign wealth funds (Mehrpouya, 2015). Organization theorists can help explore these developments by unpacking how different types of shareholders influence corporations. Different shareholders engage with corporate strategy in different ways: from direct engagement with board members (McNulty & Nordberg, 2015) to arms’ length evaluation and response strategies (Aglietta & Rebérioux, 2005). Similarly, boards respond differently when subjected to various kinds of shareholders. For example, Cobb (2015) shows how US corporations have switched to less employee-friendly pension plans when engaged by active and short-term shareholder. We welcome submissions that explore the strategies of different types of shareholders and their impacts upon corporate behavior and, ultimately, on broader society.
We furthermore welcome submissions on socially responsible investing (Slagers et al., 2012) and whether this new investment approach can have a substantial influence on corporate behavior through divestments or shareholder engagement. For example, investors such as the Cambridge University Endowment Fund or Norway’s sovereign wealth fund have recently divested from oil companies. Organization scholars may analyze these developments at the field-level or explore how such divestment strategies are perceived from within the companies that they divest from.
We invite contributions that address – but are not restricted to – the following questions:

  • How can corporate governance be developed to enable “the good organization”?
  • What are the societal implications of different discourses on corporate governance?
  • What are the formal and informal strategies that different actors in the corporate governance domain employ to shape the discourse on corporate governance?
  • How can we differentiate among different types of shareholders, their respective strategies, and their relative influence on corporate behavior?
  • How do boards interpret engagement signals (exit, voice, and loyalty) in relation to different types of investors?
  • How does pressure from big and active shareholders (private equity firms, sovereign wealth funds, etc.) increase or diminish the relative bargaining power of different stakeholders, such as executives, middle managers, workers, NGOs, or states?
  • Do ideas of ‘good’ shareholding, such as stewardship or enlightened shareholding provide a valid basis for a reform of corporate governance theory and practice?
  • Which socially responsible investment strategies (negative screening, best in class investing, impact investing, etc.) have the greatest potential to bring about “the good organization” and a more sustainable and just economy?



  • Aglietta, M., & Rebérioux, A. (2005): Corporate Governance Adrift: A Critique of Shareholder Value. Cheltenham: Edward Elgar.
  • Cobb, J.A. (2015): “Risky business: The decline of defined benefit pensions and firms’ shifting of retirement risk.” Organization Science, 26 (5), 1332–1350.
  • Davis, G.F. (2009): Managed by the Markets: How Finance Reshaped America. Oxford: Oxford University Press.
  • Epstein, G.A. (2005): “Introduction: Financialization and the world economy.” In: G.A. Epstein (ed.): Financialization and the World Economy. Cheltenham: Edward Elgar, 3–16.
  • Jackson, G. (2000): “Comparative corporate governance: Sociological perspectives.” In: J.E. Parkinson, A. Gamble & G. Kelly (eds.): The Political Economy of the Company. Oxford: Hart Publishing, 265–288.
  • Lounsbury, M., & Hirsch, P.M. (eds.) (2010): “Markets on Trial: The Economic Sociology of the U.S. Financial Crisis.” Research in the Sociology of Organizations Book Series, Vol. 30, Part A. Bingley, UK: Emerald Group Publishing Limited
  • Marti, E., & Scherer, A.G. (2016): “Financial regulation and social welfare: The critical contribution of management theory.” Academy of Management Review, 41 (2), 298–323.
  • McNulty, T., & Nordberg, D. (2015): “Ownership, Activism and Engagement: Institutional Investors as Active Owners.” Corporate Governance: An International Review, 24 (3), 346–358.
  • Mehrpouya, A. (2015): “Instituting a transnational accountability regime: The case of sovereign wealth funds and ‘GAPP’.” Accounting, Organizations and Society, 44 (0), 15–36.
  • Riaz, S., Buchanan, S., & Bapuji, H. (2011): “Institutional work amidst the financial crisis: Emerging positions of elite actors.” Organization, 18 (2), 187–214.
  • Slager, R., Gond, J.-P., & Moon, J. (2012): “Standardization as institutional work: The regulatory power of a responsible investment standard.” Organization Studies, 33(5–6): 763–790.
  • Veldman, J., & Willmott, H. (2016): “The cultural grammar of governance: The UK code of corporate governance, reflexivity, and the limits of ‘soft’ regulation.” Human Relations, 69 (3), 581–603.
Hugh Willmott is Professor of Management and Organization Studies. He joined Cass Business School in 2014, having been a Research Professor in Organization Studies at Cardiff Business School. Hugh is particularly interested in the development and application of management theory by drawing upon the resources of critical social science. Substantively, his research has contributed to the areas of professionalization, teamwork, regulation, business ethics, management learning, accounting policy and practice, organizational culture, financialization, and the management of higher education. Hugh is an Associate Editor on ‘The Academy of Management Review’, having previously served an equivalent role on the journal ‘Organization’.
Emilio Marti is currently a Visiting Scholar at Saïd Business School, University of Oxford, UK, on a scholarship from the Swiss National Science Foundation. He received his PhD from the University of Zurich in February 2015 and continues to teach at the University of Zurich. His research interests include corporate social responsibility, financial regulation, performativity, and socially responsible investing. He has published in ‘The Academy of Management Review’ and the ‘Journal of Management Studies’.
Jeroen Veldman is a senior research fellow at Cass Business School, City University London, UK. He has held a visiting professorship at UPMF, Grenoble and has previously held appointments at Cardiff Business School, UK, and the Utrecht School of Governance, Utrecht University, The Netherlands. His research addresses the historical development of the public limited liability corporate form and how this corporate form currently functions in and between organization studies, management, company law, economics, finance, accounting, politics, and corporate governance. He has published in ‘Human Relations’, ‘British Journal of Management’, and ‘Critical Perspectives on Accounting’.