The Everyday Practice of Valuation and Investment : Political Imaginaries of Shareholder Value

Horacio Ortiz provides a critical analysis of the social institutions and practices that produce and regulate stock pricing and valuation. Drawing on ethnographic fieldwork conducted among financial professionals in New York and Paris, this book shows how the political imaginaries that underpin financial markets legitimize global inequalities. The financial industry derives its legitimacy through the claim that it acts in the interest of shareholders. A vast international network of funds, banks, insurance companies, brokerages, rating agencies, and regulatory agencies defends its status by asserting that market mechanisms determine a company's true value and therefore enriching shareholders contributes to the socially optimal allocation of capital. Is this how stock prices are determined in practice? What does stock valuation reveal about the supposed efficiency of markets and what it means to act on behalf of shareholders? Horacio Ortiz provides a critical analysis of the social institutions and practices that produce and regulate stock pricing and valuation. He examines how financial professionals evaluate and invest in listed companies, unraveling the contradictory definitions of financial value that shape their behavior. Ortiz demonstrates how ideologically laden notions of investing skill and efficient markets are central to the everyday practices of financial valuation, as well as how they function to justify the broader system. He scrutinizes the technical aspects of valuation and investment, their place in social relations within and among companies, and their relation to state regulation in order to demystify how the financial industry presents prices as truths that the rest of society must accept. Drawing on ethnographic fieldwork conducted among stock brokers and investment management companies in New York and Paris, this book shows how the political imaginaries that underpin financial markets are central to producing, sustaining, and legitimizing global inequalities. "The finance industry occupies a central role in the distribution of credit worldwide. It is global network of funds, banks, insurance companies, brokerages, rating agencies, and regulatory agencies that control vast sums of money that surpass the economic power of most sovereign states. It is founded on the assumption core to capitalism that individuals meet freely within the market where prices will reflect a true value based on equilibrium of supply and demand. But what happens when we look critically at the way in which stock values are produced by the financial industry? What does this tell us about the supposed naturalness of markets and their efficiency in distributing economic resources? In Shareholder Value, Horacio Ortiz provides a critical analysis of the social institutions and practices that produce and regulate stock pricing and valuations. He demonstrates how the imaginaries of free investors and efficient markets are central to financial valuation, but they are illusive concepts even to those who depend on them. They make sense when viewed in the context of the financial industry as the legitimation of the financial industry that depends on them. Shareholder Value is based on ethnographic data gather by Ortiz in New York, Paris, and Shanghai over the course of twelve years, inclusive of interviews and internships at investment banks and interviews and course instruction at a business school. In doing so, Ortiz provides the reader with a concise understanding of the concepts that underpin global financial markets, inclusive of financial valuation, personal valuation, market efficiency, and true value"-- Provided by publisher.