Shareholder Value and Financialization: Consultancy Promises, Management Moves

Although shareholder value is the mantra that jumps out from the
pages of the daily financial press, it is often a loosely defined and
rhetorical concept, subject to little empirical study. It is also a
powerful concept, originating in and finding identification with
business consultants and promulgated via a series of metrics,
implementation and incentive packages and a promise that
purposive management action will be rewarded. This paper begins
its analysis of shareholder value with the consultants who promote
it, before turning to academic responses. The paper then presents
empirics on microperformance and the meso limits to shareholder
value which identifies gaps between what the consultants promise
and the capital markets demand, and what corporate management
can deliver. In the final section the paper argues that the process
of financialisation, of which value based management is a part, is
a contradictory one. Although attempts to increase shareholder
value must disappoint at a meso and macro level, the persistent
gap between expectations and outcomes can drive a series of
management behaviours which do change the world.