CREDIT, SHARES AND GOODWILL: A VEBLENIAN TRINITY

Marion Dieudonné ()
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Marion Dieudonné: LEDA-SDFi - Stratégie et Dynamiques Financières - LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique, Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres

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Abstract: Thorstein Veblen published an important book in 1904, The Theory of Business Enterprise, in which he focused on the financial theory of the business enterprise. Although this book was an early contribution to corporate finance, it is little-known compared with Absentee Ownership, published in 1923. From the perspective of his institutionalist tradition, Veblen observes and describes the transition of business enterprise to corporation finance. We can identify a trinity: credit, shares and goodwill. For Veblen, this trinity refers to predation, oligarchic power and goodwill-seeking, which are the guiding principles of the new era of corporate governance. Our aim is to bring to the light the links established by Veblen between credit, shares and goodwill that seem too little explored in the literature. According to Veblen, credit, shares and goodwill form a system which lay at the heart of American business in the early 20th century. Through his work The Theory of Business Enterprise, Veblen gives us an early and significant U.S analysis of the two-sided concept of goodwill. The book was one of the first institutionalist studies of the firm, opening the way for many other works on behavior within and between companies. In order to highlight this, we propose a literature review allowing a comprehensive analysis of the evolution of the concept of goodwill, its definition, valorization, and ambiguities. This overall perspective is not made by the literature.

Keywords: corporate finance; common shares and preferred shares; credit; earning capacity; goodwill; insiders and outsiders; Veblen (search for similar items in EconPapers)
Date: 2016-01-29
New Economics Papers: this item is included in nep-his, nep-hme, nep-hpe and nep-pke
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