One major theme of this course has been the social construction of markets and of economic behavior. This is the idea that markets are institutions embedded within social relationships that create and...

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One major theme of this course has been the social construction of markets and of economic behavior. This is the idea that markets are institutions embedded within social relationships that create and sustain them, and institutionalized patterns of behavior are often established through struggles between multiple, powerful actors. For example, we have talked about the social construction of the market for corporate control and about the social construction of labor markets (hiring, pay, and promotion).


In this paper, you should explain the rise of shareholder capitalism (aka the shareholder-value revolution). A strong paper should do these things:


• Identify the key players on both sides of the power struggle over shareholder value, and explain what these key players had to gain and what they had to lose.


• Identify the major arguments on both sides of the debate—those in favor of the idea that corporations should focus exclusively on shareholder value and those that support a different position.


• Explain how proponents of shareholder value ultimately won the day, focusing on how they convinced the world that their moral rationale was legitimate, not on the mechanics of how shareholder value was implemented within corporations. An important part of this is to explain how the proponents used their power to change the material interests of key actors so that they aligned with shareholder value.


The goal of this paper is not merely to describe a series of his- torical events but rather to explain an important historical shift— the shareholder-value revolution—using the key sociological concepts we’ve encountered in this course. These might include the four key mechanisms behind social construction we’ve talked about all semester: institutions, networks, power, and cognition. Since the paper is focused on a particular power struggle, you might also find it useful to use some of the more recent concepts we’ve discussed, particularly social closure and status. Unlike in Paper 1, you do not need to define these terms—by now you should know what they mean, and you will be evaluated on your ability to use these concepts, not define them.


Length and Formatting


The paper should be 1900–2300words. (This is about – double- spaced pages.) Be clear and concise; you will not be rewarded for padding your word count with unnecessary words and sentences.


You do not need to include a title page or even a title. Just write your name, Paper , and your TA’s name and section time at the top.


You should double-space your paper. All other default settings should be fine (-point font, -inch margins); we won’t nitpick about these things, since the paper length is defined by word count, not by number of pages. Use a professional-looking, readable font (Garamond, Times New Roman, Palatino, Arial, or similar).


Essays will be graded on a numerical scale. Style counts, so please proofread and edit your essay carefully.


References and Quotations


You do not need to include a “References” or “Bibliography” section for this paper, since you’ll be using readings directly from the syllabus. You may use direct quotations from the readings to support your arguments. You should keep these short (probably no more than a sen-


tence or two in any given quote). For the most part, you should explain things in your own words, but sometimes the reading summarizes something concisely better than you can paraphrase it, and a direct quotation makes more sense. You should put these quotations inside quotation marks, followed by the author’s name, year of publication, and page number in parentheses. For example: “Social institutions create mental maps of the world in individuals” (Dobbin 2004, pg. 31).

Answered Same DayOct 28, 2021

Answer To: One major theme of this course has been the social construction of markets and of economic behavior....

Dilpreet answered on Oct 29 2021
142 Votes
Running Head: Shareholder Capitalism            1
Shareholder Capitalism        7
SHARE HOLDER CAPITALISM
Share holder capitalism in general can be explained as a corporate form in which companies which are legally independent can pool capital from shareholders which a liability of limited period and is compensated by an open stock market in which these shares can be traded freely. Sharehol
der revolution of the 1980s saw a drastic change in the orientation of business which was not much oriented towards the shareholders of the business such as managers, consumers, and labors etc. Economists in the early 1980s believed that the business should be aimed at maximizing the wealth of the shareholders which shall in return attract more investments in the economy. In the year 1982 buying back company shares were made legal which gave more money to investors. This revolution changed shareholder capitalism to a great extent.
The key players of the power struggle were hostile takeover firms, institutional investors and security analysts. Other players of the revolution included ethical activists who pushed corporations on environmental issue using stock and executive pay, pension funds with the investment of trillions of dollars and the advocates of the Sovereign Wealth Funds. Also several politicians pushed to place workers on corporate boards. The institutional investors represented thousands of pension funds participants and mutual funds buyers. As these pension funds and mutual fund holders were paid for the performance of their funds therefore, it was their own interest to maximize the prices of the stock. They saw their own interest while they were representing the pension and mutual fund holders.
Hostile takeover firms had a huge impact on the mind set of people as it discouraged diversification and demonstrated that diversified firms have low stock process which will not be in the favor of the shareholders of the firm. These made the executives think of shareholder maximization. This idea totally overpowered the existing idea of investing in different industries which would maximize the overall profit of the organisation. There were several regulatory changes which promoted the theory behind the hostile takeover of the firms. Hostile takeover of firms was promoted even by the government and the court by liberalizing the rules and regulations of the hostile takeover of firms. Many well known personalities were of the belief that, “how successful the strategy of buying up large conglomerates and selling off tangential and unprofitable businesses to increase the stock price could be.” (Dobbin & Zorn 2005, pg. 186).
There are evidences showing the impact of the hostile takeover movement on the companies in the list of Fortune 500. The firms were always in the threat of hostile takeover and protested against it to minimize this trend. This trend put an end to the diversification processes as well. The idea behind the takeover firms was to break the conglomerates whose market valuation is low and convinces the executives that this is what will be in the favor of the shareholders. These takeover specialists framed their activities t make money in such a way that it appeared as if they are working for the benefit of the shareholders.
Securities analysts were of the belief that “Hostile takeover firms deconstructed diversified conglomerates and gave CEOs a reason to spin off unrelated businesses themselves” (Dobbin & Zorn 2005, pg. 190). Security analysts were not in the favor of diversification and tried to focus the attention of CEO on financial numbers. Securities analysts also help to define the measures by which performance of the corporations could be measured. Analysts did not promote diversification because they specialized by industry and believed that firms with...
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