In the present era of financialization, one of the defining dimensions has been the financialization of the corporation and the “pursuit of shareholder value” (see Chapter 2). One aspect of the financialization of the corporation is the degree to which non-financial corporations are becoming more involved with finance and financial transactions. While non-financial corporations are predominantly involved with production and distribution of goods and services, they have always been involved with finance, at least in the minimal sense of using money to buy goods and services and borrowing through loans and the issue of bonds and equity to fund investment. In the financialization era, non-financial corporations have become increasingly involved with finance. This includes the provision of loans to consumers to enable purchase of their products (a notable example being car companies with significant finance divisions). It also includes extensive financial dealing, ranging from holding and managing extensive financial assets through to the engagement in commodity market futures.

The “pursuit of shareholder value” is the promotion of the view that profits and dividends (and thereby the stock market valuation of the corporation) should be or are the primary purpose of the corporation. This has been variously argued along legal grounds and on efficiency grounds. This perspective of the central importance of the “pursuit of shareholder value” places the shareholders (and thereby financial interests) above those of other stakeholders such as employees, customers and the wider society. Financial markets and financial institutions exert, through a variety of routes, pressures on the managers of corporations to adopt business practices promoting shareholder value. The pressures for shareholder value come at the expense of other stakeholders of the corporation, workers, customers and the wider public.

Froud et al. (2006: 8) argue that “shareholder value was never a well-defined concept but a pliable rhetoric that was appropriated and inflected by different social actors”. In their review of the evidence on giant company CEO pay over 20 years they show how top managers in both US and UK companies were able to become rich through what they term “value skimming”. Further, they argue that it is growing pressure from capital markets that redefines company strategy and changes the work of management.