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Comment: A new financial capitalism? Explaining the persistence of exit over voice in contemporary corporate governance
Author(s) -
Jackson Gregory
Publication year - 2008
Publication title -
european management review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.784
H-Index - 32
eISSN - 1740-4762
pISSN - 1740-4754
DOI - 10.1057/emr.2008.5
Subject(s) - corporate governance , capitalism , preference , shareholder , institutional investor , market economy , control (management) , economics , business , political economy , accounting , finance , political science , management , law , politics , microeconomics
The article ‘A New Finance Capitalism?’ raises an important paradox. Institutional investors are growing in size and the concentration of their stakes gives them potential influence over managers. Yet we observe an unexpected absence of shareholder activism and voice on the part of institutional investors in contemporary America. Concentration occurs without commitment. This comment further explores some reasons why today's largest investors seem resigned to or even to benefit from their relative passivity and preference of exit over voice. These reasons include conflicts of interest, market failures, lack of organizational capabilities, use of informal voice, and dependence of markets for corporate control. Corporate governance scholars have surprisingly little evidence on these topics, which suggest an important agenda for future research.