 “DOWNSIZE AND DISTRIBUTE” OR “MERGE AND MONOPOLIZE”? A CRITIQUE OF CORPORATE FINANCIALIZATION THEORIESNiall Reddy No 2zy5h, SocArXiv from Center for Open Science Abstract: A large literature in heterodox political economy addresses an apparent puzzle in which investment has declined while profits have held up during the financialization era. The dominant answer to this puzzle centers on the rise of shareholder value orientation and the “downsizing and distributing” (DD) imperative it imposes on firms. Yet the detailed empirical literature on the topic - focussed on partial effects - pays precious little attention to actual observed patterns of growth, investment and distribution at a firm level. Digging deep into firm level data and correcting several conceptual and measurement errors, this paper challenges several key stylized facts of the financialization account, revealing a different set of patterns which are very difficult to square with stronger versions of DD theory. It shows that the profit-investment puzzle is not a paradox of the financialization era, but only of the post-2000 period. Similarly, the ramping up of payout rates only happens in a broad way after the turn of the millennium. While financialization theories cannot account for the 2000s watershed I argued that a trifecta of other structural shifts can. Ultimately this paper questions the widespread practice of giving analytical priority to financialization in heterodox political economy. Date: 2024-04-01 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:osf:socarx:2zy5h Access Statistics for this paper More papers in SocArXiv from Center for Open Science |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.