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| Author: | Watson, M. |
| Title: | Investigating the potentially contradictory microfoundations of financialization |
| Journal: | Economy and Society
2009 : MAY, VOL. 38:2, p. 255-277 |
| Index terms: | capital asset pricing finance stock markets |
| Language: | eng |
| Abstract: | Previously, research on financialization has found many instances in which companies try to demonstrate the vitality of their stock-market position in ways which ultimately prove to be self-harming. This study demonstrates that these actions are in the microfoundations of financialization. Under conditions of financialization, companies create additional sources of credit to capitalize their productive activities by driving their stock into greater increases than the market average, thereby generating capital gains. Yet, the more it becomes public knowledge that the financing tricks used inflate the stock price provide no productive benefit to the company, the more it would seem to create incentives for fund managers to hold portfolios that replicate the stock market as a whole. |
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