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The Impact of Financialization on Management and Employment Outcomes

Author

Listed:
  • Rosemary Batt

    (Cornell University)

  • Eileen Appelbaum

    (Rutgers University)

Abstract

This paper examines three questions: 1) How and why have financial models of doing business emerged in the last three decades? 2) What new forms of financial capitalism have become important in the current period? 3) How do new financial intermediaries, such as private equity, and the financial strategies of nonfinancial corporations affect the management of companies and employment outcomes? The paper describes how deregulation and institutional change created the conditions for a new, more powerful role for finance capital in the governance of U.S. companies, and it synthesizes the empirical evidence on the process and outcomes of financialization in large publicly traded corporations, as well as those taken over by private equity. Areas for future research are identified to examine how financialization affects management and employment relations in the postcrisis period.

Suggested Citation

  • Rosemary Batt & Eileen Appelbaum, 2013. "The Impact of Financialization on Management and Employment Outcomes," Upjohn Working Papers and Journal Articles 13-191, W.E. Upjohn Institute for Employment Research.
  • Handle: RePEc:upj:weupjo:13-191
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    References listed on IDEAS

    as
    1. Paul A. Gompers & Andrew Metrick, 2001. "Institutional Investors and Equity Prices," The Quarterly Journal of Economics, Oxford University Press, vol. 116(1), pages 229-259.
    2. Ludovic Phalippou & Oliver Gottschalg, 2009. "The Performance of Private Equity Funds," Review of Financial Studies, Society for Financial Studies, vol. 22(4), pages 1747-1776, April.
    3. Weisbach, Michael & Axelson, Ulf & Jenkinson, Tim & Stromberg, Per, 2008. "Leverage and Pricing in Buyouts: An Empirical Analysis," Working Papers 08-1, University of Pennsylvania, Wharton School, Weiss Center.
    4. Thomas I. Palley, 2007. "Financialization: What It Is and Why It Matters," Working Papers wp153, Political Economy Research Institute, University of Massachusetts at Amherst.
    5. Brian J. Hall & Jeffrey B. Liebman, 1998. "Are CEOs Really Paid Like Bureaucrats?," The Quarterly Journal of Economics, Oxford University Press, vol. 113(3), pages 653-691.
    6. Steven N. Kaplan & Per Stromberg, 2009. "Leveraged Buyouts and Private Equity," Journal of Economic Perspectives, American Economic Association, vol. 23(1), pages 121-146, Winter.
    7. Walter Y. Oi, 1962. "Labor as a Quasi-Fixed Factor," Journal of Political Economy, University of Chicago Press, vol. 70, pages 538-538.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    United States; financialization; market deregulation; institutional change; private equity; institutional investors; management and labor relations;

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • G3 - Financial Economics - - Corporate Finance and Governance
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
    • N2 - Economic History - - Financial Markets and Institutions
    • P1 - Economic Systems - - Capitalist Systems

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