Strong Managers, Weak Owners: The Political Roots Of American Corporate Finance Project Muse Upcc Books

In this reinterpretation of the evolution of the American corporation, the author demonstrates that the ownership structure of large US firms owes its distinctive character as much to politics as to economics and technology. His provocative examination addresses essential issues facing American businesses today as they compete in the new international marketplace. Why are large American corporations owned by hundreds of relatively small stockholders, while a handful of stockholders control big blocks of stock in German and Japanese corporations? Why are banks and other potentially large investors restricted by law from owning controlling interests in American corporations? Why are senior managers of US firms so powerful, while the actual owners are frequently far removed from day-to-day business, even when they are large financial institutions? These questions are debated regularly in both popular and scholarly media. This book provides the historical background to the discussion. This text offers a new perspective on the corporate upheavals of the 1980s and 1990s, when relationships among shareholders, boardrooms, and senior managers were thrown into upheaval. Numerous proposals are debated daily in the business press about how the relationships among these three groups should change to make corporations more productive and more effective competitors in the world market. Roe argues that lasting change will be difficult to achieve without understanding how political and social forces created and shaped the modern American corporation. The Distinctive Character Of Corporate Business Enterprise In The United States - Large Firms Guided By Powerful, Centralized Managers, Historically Deferential Directors, And Distant Shareholders - Is Usually Thought To Be The Inevitable Result Of Economic And Technological Forces. In This Major Reinterpretation Of The Origins And Evolution Of Corporate Structure, Mark Roe Shows That The Nature Of The American Corporation Derives Not Only From These Forces But Also From Political Decisions That Made Alternative Forms Of Organization Costly Or Illegal.^ Drawing Upon Work In Economics, History, Law, And Political Science, Roe Argues That The Role Of Politicians In Mediating The Interaction Between Firms And Financiers Is A Critical, But Neglected, Part Of The Explanation Why Certain Forms Rather Than Others Prevailed. In Their Classic 1932 Study, The Modern Corporation And Private Property, Adolf Berle And Gardiner Means Argued That The Separation Of Ownership And Control Was The Consequence Of Industrial Technologies Requiring Large-scale Production, Which In Turn Led To Highly Dispersed Stockholding. Roe Demonstrates, However, That The Ownership Structure Of The American Corporation Represents Just One Of Several Possible Outcomes, And That Other Organizational Forms Arose Abroad (in Germany And Japan, For Example) Under The Influence Of Different Political Conditions.^ At A Number Of Critical Junctures, Political Choices Were Made About How Savings Were To Be Channeled To Industry That Sharply Restricted The Power Of Financial Institutions To Shape The Growth Of Large Firms. These Decisions, Which Pre-dated The New Deal, Going As Far Back In Some Cases As The Nineteenth Century, Reflected The American Public's Enduring Dislike Of Concentrated Financial Power. Once These Rules For The Governance Of Financial Institutions Were In Place - But Not Before - The Berle-means Corporation Became Inevitable. In Recent Years, New Technological And Competitive Challenges Have Forced Many Of America's Largest Firms To Restructure, Often Painfully. Some Are Now More Efficient And Productive, Others Are Not. Relationships Among Shareholders, Directors, And Senior Managers Remain In Flux, And Tensions Over Whether Shareholders Are To Have A Greater Or Smaller Voice In Corporate Management In The Future May Become Acute.^ If History Is Any Guide, Roe Suggests, The Issue Will Eventually Be Settled Not Only In Boardrooms And On Stock Exchanges But Also In Statehouses And In Congress.--book Jacket. The Economic Paradigm -- Diffuse Ownership As Natural Economic Evolution -- Fragmentation's Costs -- The Political Paradigm -- Diffuse Ownership As Political Product -- A Political Theory -- The Historical Evidence -- Banks -- Insurers -- Banks Again -- Mutual Funds -- Pension Funds -- The Contemporary And Comparative Evidence -- Takeovers -- Corporate Ownershiphin Germany And Japan -- A Small Comparative Test Of The Political Theory -- Counterpoint I -- Political Evolution In Germany And Japan? -- Trends In The United States -- An American Crossroads -- Policy Recommendations -- Managers As The Problem? -- Short-term Finance As The Problem? -- Industrial Organization As The Problem? -- Counterpoint Ii -- Changing The American Ownership Structure? Mark J. Roe. Includes Bibliographical References (p. [289]-308) And Index. In this major reinterpretation of the evolution of the American corporation, Mark Roe convincingly demonstrates that the ownership structure of large U.S. firms owes its distinctive character as much to politics as to economics and technology. His provocative examination addresses essential issues facing American businesses today as they compete in the new international marketplace. In this major reinterpretation of the evolution of the American corporation, Mark Roe convincingly demonstrates that the ownership structure of large U.S. firms owes its distinctive character as much to politics as to economics and technology. His provocative examination addresses essential issues facing American businesses today as they compete in the new international marketplace. 000_Frontmatter......Page 1 001_Chapter 1......Page 17 002_Chapter 2......Page 25 003_Chapter 3......Page 35 004_Chapter 4......Page 42 005_Chapter 5......Page 67 006_Chapter 6......Page 76 007_Chapter 7......Page 110 008_Chapter 8......Page 118 009_Chapter 9......Page 140 010_Chapter 10......Page 163 011_Chapter 11......Page 185 012_Chapter 12......Page 203 013_Chapter 13......Page 214 014_Chapter 14......Page 226 015_Chapter 15......Page 238 016_Chapter 16......Page 242 017_Chapter 17......Page 247 018_Chapter 18......Page 256 019_Chapter 19......Page 264 020_Chapter 20......Page 270 021_Chapter 21......Page 279 022_BackMatter......Page 299