Masquerading in the U.S. Capital Markets: The Dark Side of Maintaining an Institution

30 Pages Posted: 2 Mar 2013  

Cynthia E. Clark

Bentley University - Department of Management

Sue Newell

Bentley University - Department of Management; University of London, Royal Holloway - School of Management

Date Written: Spring 2013

Abstract

This article examines the work of professional service firms (PSFs) in their relationships with public corporations; work that is designed to ensure that investors and potential investors have information that will enable them to participate in the capital markets. Using an institutional theory lens, we view these efforts by PSFs as institutional maintenance work and specifically analyze their work related to policing (i.e., rating), enabling (i.e., tutoring), and embedding and routinizing (i.e., collaborating) that helps to support the capital market as a core institution in society. We illustrate how there is a “dark” side to each of these forms of institutional work that exists because of ongoing conflicts of interest within and between their work practices. This dark side has the unintended consequence of producing often biased information or information unavailable to many. When a crisis brings this bias to light, some repair is introduced but often not enough to alleviate the distortion. Our contribution is, therefore, to shed light on the dark side of institutional maintenance work and to explore why repair is increasingly necessary, but often only partially effective.

Suggested Citation

Clark, Cynthia E. and Newell, Sue, Masquerading in the U.S. Capital Markets: The Dark Side of Maintaining an Institution (Spring 2013). Business and Society Review, Vol. 118, Issue 1, pp. 105-134, 2013. Available at SSRN: https://ssrn.com/abstract=2227252 or http://dx.doi.org/10.1111/basr.12004

Cynthia E. Clark (Contact Author)

Bentley University - Department of Management ( email )

175 Forest Street
Waltham, MA 02145
United States

Sue Newell

Bentley University - Department of Management ( email )

175 Forest Street
Waltham, MA 02145
United States
781-891-2399 (Phone)

HOME PAGE: http://ecampus.bentley.edu/dept/mg/management/suehomepage.htm

University of London, Royal Holloway - School of Management

Egham
Surrey, Egham TW20 8DG
United Kingdom

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