Financialization and company law:

A study of the UK Company Law Review

David Collison, Stuart Cross, John Ferguson, David Power, Lorna Stevenson

Research output: Contribution to journalArticle

10 Citations (Scopus)

Abstract

This paper considers the role of company law in the context of financialization, with a focus on shareholder primacy. After a detailed review of the provenance of the putative shareholder primacy rationale, the study provides an analysis of relevant aspects of the Company Law Review (CLR) process in the UK. This ultimately led to the Companies Act 2006 (CA 2006) which determined that shareholder primacy would be maintained as a key principle of UK company law. The CLR had raised the central question: 'in whose interests should companies be run?' and put forward two alternatives: one based on shareholder
primacy, and the other based on balancing the interests of a range of stakeholders. The two alternatives were described as 'enlightened shareholder value' and 'pluralism'. Drawing on interviews with key participants in the CLR process, findings from this study suggest that: the breadth of expertise and opinion represented on the CLR was rather narrow; there was a presumption in favour of the status quo of shareholder primacy; there was a lack of any
meaningful discussion of the alternatives and that little or no consideration was given to comparative international evidence. In fact. some key participants expressed a great deal of skepticism about the value of the process. The new form of words governing directors' duties, which finally emerged in legislation, was thought by some to embed the concept of shareholder primacy more firmly than before - arguably reflecting the process of financialization. C 2012 Elsevier Ltd. All rights reserved.
Original languageEnglish
Pages (from-to)5-16
Number of pages12
JournalCritical Perspectives on Accounting
Volume25
Issue number1
Early online date17 Dec 2012
DOIs
Publication statusPublished - Feb 2014

Fingerprint

company law
shareholder
shareholder value
pluralism
Financialization
Company law
director
expertise
legislation
stakeholder
act
Shareholders
Primacy
lack
interview
evidence

Keywords

  • Critical
  • Public interest
  • Financialization
  • Company Law
  • Corporate governance

Cite this

@article{ac60f460f07144e68f617a2903af4da6,
title = "Financialization and company law:: A study of the UK Company Law Review",
abstract = "This paper considers the role of company law in the context of financialization, with a focus on shareholder primacy. After a detailed review of the provenance of the putative shareholder primacy rationale, the study provides an analysis of relevant aspects of the Company Law Review (CLR) process in the UK. This ultimately led to the Companies Act 2006 (CA 2006) which determined that shareholder primacy would be maintained as a key principle of UK company law. The CLR had raised the central question: 'in whose interests should companies be run?' and put forward two alternatives: one based on shareholderprimacy, and the other based on balancing the interests of a range of stakeholders. The two alternatives were described as 'enlightened shareholder value' and 'pluralism'. Drawing on interviews with key participants in the CLR process, findings from this study suggest that: the breadth of expertise and opinion represented on the CLR was rather narrow; there was a presumption in favour of the status quo of shareholder primacy; there was a lack of any meaningful discussion of the alternatives and that little or no consideration was given to comparative international evidence. In fact. some key participants expressed a great deal of skepticism about the value of the process. The new form of words governing directors' duties, which finally emerged in legislation, was thought by some to embed the concept of shareholder primacy more firmly than before - arguably reflecting the process of financialization. C 2012 Elsevier Ltd. All rights reserved.",
keywords = "Critical, Public interest, Financialization, Company Law, Corporate governance",
author = "David Collison and Stuart Cross and John Ferguson and David Power and Lorna Stevenson",
year = "2014",
month = "2",
doi = "10.1016/j.cpa.2012.07.006",
language = "English",
volume = "25",
pages = "5--16",
journal = "Critical Perspectives on Accounting",
issn = "1045-2354",
publisher = "Elsevier",
number = "1",

}

Financialization and company law: A study of the UK Company Law Review. / Collison, David; Cross, Stuart; Ferguson, John; Power, David; Stevenson, Lorna.

In: Critical Perspectives on Accounting, Vol. 25, No. 1, 02.2014, p. 5-16.

Research output: Contribution to journalArticle

TY - JOUR

T1 - Financialization and company law:

T2 - A study of the UK Company Law Review

AU - Collison, David

AU - Cross, Stuart

AU - Ferguson, John

AU - Power, David

AU - Stevenson, Lorna

PY - 2014/2

Y1 - 2014/2

N2 - This paper considers the role of company law in the context of financialization, with a focus on shareholder primacy. After a detailed review of the provenance of the putative shareholder primacy rationale, the study provides an analysis of relevant aspects of the Company Law Review (CLR) process in the UK. This ultimately led to the Companies Act 2006 (CA 2006) which determined that shareholder primacy would be maintained as a key principle of UK company law. The CLR had raised the central question: 'in whose interests should companies be run?' and put forward two alternatives: one based on shareholderprimacy, and the other based on balancing the interests of a range of stakeholders. The two alternatives were described as 'enlightened shareholder value' and 'pluralism'. Drawing on interviews with key participants in the CLR process, findings from this study suggest that: the breadth of expertise and opinion represented on the CLR was rather narrow; there was a presumption in favour of the status quo of shareholder primacy; there was a lack of any meaningful discussion of the alternatives and that little or no consideration was given to comparative international evidence. In fact. some key participants expressed a great deal of skepticism about the value of the process. The new form of words governing directors' duties, which finally emerged in legislation, was thought by some to embed the concept of shareholder primacy more firmly than before - arguably reflecting the process of financialization. C 2012 Elsevier Ltd. All rights reserved.

AB - This paper considers the role of company law in the context of financialization, with a focus on shareholder primacy. After a detailed review of the provenance of the putative shareholder primacy rationale, the study provides an analysis of relevant aspects of the Company Law Review (CLR) process in the UK. This ultimately led to the Companies Act 2006 (CA 2006) which determined that shareholder primacy would be maintained as a key principle of UK company law. The CLR had raised the central question: 'in whose interests should companies be run?' and put forward two alternatives: one based on shareholderprimacy, and the other based on balancing the interests of a range of stakeholders. The two alternatives were described as 'enlightened shareholder value' and 'pluralism'. Drawing on interviews with key participants in the CLR process, findings from this study suggest that: the breadth of expertise and opinion represented on the CLR was rather narrow; there was a presumption in favour of the status quo of shareholder primacy; there was a lack of any meaningful discussion of the alternatives and that little or no consideration was given to comparative international evidence. In fact. some key participants expressed a great deal of skepticism about the value of the process. The new form of words governing directors' duties, which finally emerged in legislation, was thought by some to embed the concept of shareholder primacy more firmly than before - arguably reflecting the process of financialization. C 2012 Elsevier Ltd. All rights reserved.

KW - Critical

KW - Public interest

KW - Financialization

KW - Company Law

KW - Corporate governance

U2 - 10.1016/j.cpa.2012.07.006

DO - 10.1016/j.cpa.2012.07.006

M3 - Article

VL - 25

SP - 5

EP - 16

JO - Critical Perspectives on Accounting

JF - Critical Perspectives on Accounting

SN - 1045-2354

IS - 1

ER -