A Skeptical View of Financialized Corporate Governance

20 Pages Posted: 26 Jun 2017 Last revised: 10 Aug 2017

See all articles by Anat R. Admati

Anat R. Admati

Stanford Graduate School of Business

Date Written: June 26, 2017

Abstract

Financialized corporate governance as commonly practiced causes significant inefficiencies and harm. Corporations and governments routinely fail to design and enforce rules that reduce the opacity of corporations, create effective commitments that prevent harm, and ensure proper accountability. The financial sector provides extreme illustrations of these governance failures, which persist despite repeated scandals and crises. Misleading narratives that obscure reality enable individuals in the private and public sectors, even in well-developed democracies, to abuse power with impunity.

Keywords: Political Economy of Corporation, Corporate Fraud, Political Bargains, Corporate Accountability, Corporate Settlements, Rent Seeking

JEL Classification: G3, P1, P16, N2

Suggested Citation

Admati, Anat R., A Skeptical View of Financialized Corporate Governance (June 26, 2017). Journal of Economic Perspectives, Vol. 31 No. 3, 2017, pp 131-150, Rock Center for Corporate Governance at Stanford University Working Paper No. 227, Stanford University Graduate School of Business Research Paper No. 17-51, Available at SSRN: https://ssrn.com/abstract=2992751

Anat R. Admati (Contact Author)

Stanford Graduate School of Business ( email )

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