The Financialization of the US Forest Products Industry: Socio-Economic Relations, Shareholder Value, and the Restructuring of an Industry

Abstract

This paper draws on theories of socio-economic change stemming from political economy and economic sociology to examine the financialization of the US forest products industry. I argue that the widespread adoption of shareholder value norms of corporate governance constitutes one of the core ideological foundations for explaining how the financialization of non-financial firms was accomplished. At the same time, I suggest that economic sociologists’ emphasis on the role of shareholder value ideology tends to obscure the concrete realities of contemporary capitalism and the socio-economic relations that underlie managerial conceptions of control. In this paper, I adopt a dialectical methodology that works at multiple levels of abstraction in order to highlight the internal relationship that exists between managerial conceptions of control and the material processes of capital accumulation. Using data mined from corporate proxy statements, I show that increases in concentrated stock ownership among institutional investors and the use of incentive-based compensation—among other important factors—underlie the adoption of shareholder value strategies in the US forest products sector. I then demonstrate how the pursuit of shareholder value reshaped the US forest products in the interests of the financial community while undermining long-term stability of the industry and the people who depend on it.