Of Insane Forms - From Collectives to Management Controlled Organisations to Shareholder Value Organisation: Building Societies, A Case Study
Warwick School of Law Research Paper No. 2009/04
Journal of Banking Regulation May 2010
32 Pages Posted: 19 Oct 2009 Last revised: 13 May 2010
Date Written: October 19, 2009
Abstract
In this paper I assert that when a number of the larger mutual building societies converted into PLCs they adopted the normative values of the prevailing corporate governance strategies of the time. These normative values were strongly influenced by the American originating “law and economics” approach which, in the context of corporations emphasised the importance of achieving high returns for shareholders, or more pithily, of achieving “shareholder value”. Converted societies therefore became “shareholder value” organisations (SVOs) which propelled them into a business orientation which was very different from that prior to conversion, and to that of building societies which continued to operate as mutual societies. As a result, the converted societies adopted practices which made them more vulnerable to changes in the wider economy, to the extent that they became central casualties of the current economic crisis.
Keywords: Corporate governance, building societies, shareholder value, management control
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