Who Cares About Financialization? Explaining the Decline in Political Salience of Active Markets for Corporate Control

Abstract

The role of financial markets, motives, actors, and institutions has expanded continuously in recent decades, but – contrary to Polanyi’s “double movement” theory and despite the current financial crisis – market-containment efforts have grown weaker over time. The present paper approaches this puzzle by explaining how the practice of corporate takeover bids gradually gained political acceptance in the United Kingdom from the 1950s onward. Through its expansion, the market for corporate control contributed directly to eroding political resistance by triggering processes of routinization, adaptation, and elimination. Routinization decreases issue salience for “average voters” because it lowers the news value of takeover bids. Adaptation to new profit opportunities increases the number of beneficiaries from takeover bids, thereby bolstering premarket clienteles. Elimination of stakeholder-oriented companies – through constant exposure to takeover threats – demoralizes the opponents of active markets for corporate control by leaving them with less to fight for. Empirical evidence is drawn mainly from qualitative and quantitative analysis of British parliamentary debates regarding takeover bids between 1953 and 2011.