Finance at Work

Valérie Boussard

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781315470276
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

In the collective psyche, a financier is a capitalist. In managerial capitalism, the notion of the 'manager' emerged, and the role of the manager was distinct from the role of the 'owner'. Financial capitalism is similarly underpinned by financiers who are not the holders of the financial assets they buy, sell, trade or advise upon.

Finance at Work explores the world of financiers, be they finance-oriented CEOs, CFOs, financial journalists, mergers and acquisitions' advisors or wealth managers. Part I investigates the professional trajectories of members of corporate boards and financialisation as the dissemination of financial logic outside its primary 'iron cage'; Part II responds by studying financiers at work within financial occupations or financial operations involving external actors; while Part III pursues the issue of financial boundaries by seeking out the way financial logic crosses these boundaries. Part IV takes back the hypothesis of differentiations within finance presented in Part I, and analyses the internal boundaries of asset management, wealth management and leveraged buyout (LBO) acquisitions.

This book is essential reading for researchers and academics within the field of finance who aim to understand the 'spread of finance' in contemporary societies.

PART I

The boundaries of finance

Exclusionary process, social closure and inner regulation

Introduction

Interrogating financialisation as an analytic

Karen Ho

Just as “globalisation” and “neoliberalism” were understood to be the “defining dynamics” of late global capitalism and thus became key conceptual rubrics through which many critical scholars approached the massive shifts in the global social economy at the end of twentieth century; in the contemporary moment, the concept of “financialisation” has taken on this role of symbolising and describing the socio-economic processes of a crisis-prone, unprecedentedly unequal capitalism that privileges short-term finance (Christopher, 2015). As with any sweeping representation, some scholars rightly wonder whether or not financialisation is used too universally just as “neoliberalism” was in the previous decades. For example, in “The Uses of Neoliberalism,” anthropologist James Ferguson critiques academic discourses of neoliberalism for using it as a broad umbrella term to index the totality of shifts occurring in multiple social domains due to decontextualized “market forces.” By universalising and decontextualizing neoliberalism, it was utilised to refer to everything and thus nothing at all. To what extent is financialisation suffering a similar analytical problematic? If scholars point to the increasing influence of financial practices, ideologies, models, and channels of accumulation in order to call attention to rising inequality and the dismantling of the multiple institutional and social safety net, to what extent do we overly imbue financialisation with too much explanatory power? Certainly, the “black box” of finance leads to such multi-pronged attribution, and engenders the question of whether or not financialisation has become too much of a meta-narrative to be a useful analytic given all that is claimed in its name. Moreover, it is important to acknowledge the perennial question of whether or not financialisation indexes and claims something really new about the contours and crises of capitalism.

The deeply ethnographic, contextual, and archival work of this part directly addresses these concerns in the financialisation literature through grounded work documenting and analysing the particularities through which finance constructs and cajoles influence in other sectors of the social economy. In other words, by painstakingly tracing how specific financial actors and institutions are attempting to extend their reach, their expertise, and their ways of knowing, these chapters do not simply presume linear and increasing financial capture. Rather, they demonstrate and render specific the struggles, hard work, and translations through which particular gains are made (or not). In particular, this collection of chapters shows that it is precisely through what might be termed boundary work that finance attempts to promulgate its spheres of influence.

As Fredrik Barth (1969) has long argued with regard to the social construction of ethnicity, boundaries index the presence and politics of group-making that are not “natural” but rather reflect cultural decisions about who or what is included in particular social domains. Similarly, in the context of the growing power of financial actors, boundaries are often understood and interpreted as either barriers or protection, depending on one’s socio-economic position and cultural values in an uneven terrain of power. Analysing, then, the production, policing, erosion, and/or breaking down of boundaries becomes a key avenue for exploring the strategies and directionality of financial actors and institutions.

For instance, Valérie Boussard and Marie-Anne Dujarier’s deeply ethnographic chapter, “Let’s make the company a bunch of figures: professional representations in mergers and acquisitions firms,” makes the crucial observation that in order to commodify a firm – a complex social institution with multiple claims upon it – and turn it into a “bunch of figures” and “a bundle of assets,” the construction of a particular boundary is necessary. Specifically, financial actors in the mergers and acquisitions (M&A) sector, in helping to affect the representation and treatment of companies as commodities, turns the liquidation of companies for purposes of short-term shareholder value into a game, into an exciting and pleasurable transaction that is interpreted as personal professional success. In a significant cultural twist, financial professionals understand the costs of corporate mergers and restructurings not as worker dislocation or unemployment but as costs to themselves professionally if the deal does not get done. In other words, turning companies into commodities gets internally embodied as inter-professional reputational stakes between M&A professionals, not as a larger socio-economic decision generating massive inequality. The boundary between finance and the societal costs of corporate liquidations is not premised on actual distance (as in disconnection), but rather is deliberately produced wherein the larger social costs get transformed, reduced, and reinterpreted as professional costs if the liquidation does not occur. It is, then, a fundamental misreading of financialisation to say that finance is abstracted and disconnected from the growing precarity of most workers; the precarity is actively produced yet is viewed from financiers’ standpoints as professional identity, commitment, and competition.

In a related but also divergent approach to boundaries, Emmanuel Lazega, Sylvan Lemaire, and Lise Mounier, in their chapter “Financial logic and Bankers’ institutional entreprenuership: the politics of the ‘zombies’ debate in bankruptcy proceedings at the Commercial Court of Paris (2000–2005),” demonstrate how dominant finance seeks to actively blur boundaries between socio-economic and political domains. In other words, judges in commercial courts who were trained and embedded within the banking industry (in stark contradistinction to judges socialised in other sectors and industries) not only ruled in favor of financial interests, but also shared similar values, ideologies, and approaches to corporate goals and purpose, which was to liquidate and restructure institutions in favour of creditors and investors, not employees. As such, in order to “extend financial logics and pragmatism beyond the boundaries of the financial sector,” it is crucial to train various financial actors (who often move beyond banking to other industries such as law) in this specific methodology so that their epistemic and institutional capture of other arenas is framed as common-sense and good advice. I would also argue that financial actors are imbued with a sense that boundary transgressions between different socio-economic domains are a positive socio-economic good precisely because not only are markets deemed “smart” and “in the know,” but also that market ideologies and practices belong in multiple realms.

It is interesting to note the double standard: when it comes to categories of people, with specific ideas about corporate governance, their crossing “into” finance is more heavily policed, and yet when financial ideas transgress multiple social domains, that boundary crossing is presumed to be proper “regulation” of the normal order of things. For example, also addressing issues of boundary-making, Natascha van der Zwan’s wonderfully historical chapter “Buying it: financialisation through socialisation” shows that financial subjectivities are constructed as exclusive, and as cohering specifically to elite, upper-middle class (male and white) subjects, who also uphold particular financial values and approaches to investments and corporate governance. The very case of a blue-collar, unionized site (that believes in corporations as social institutions where labor has a central voice) attempting to amass a multi-million LBO (leveraged buyout) investment fund with advice and support from Wall Street investment banks created a boundary transgression precisely because of the exclusivity – in both social positioning as well as ideology – of financial subjectivities. The fact that this exclusive boundary was actively utilised to discipline the values undergirding the labor-led LBO fund (the Employee Partnership Fund) to create “mimetic isomorphism” such that an “alignment of interest between fund organizers and fund investors” that favor finance was produced, demonstrates a strategy of dominant finance. In other words, the high-status and exclusive boundary of finance was actively mobilised not only to access and lay claim to billions of new investment dollars from union pension funds, but also to socialise and culturally train these multiply positioned investor sensibilities and monies for the purposes of Wall Street priorities and experiments in financial corporate governance.

Of course, as Taylor Spears demonstrates in “Matching the market: calibration and the working practices of quants,” exclusive boundaries are not simply the preserve of cross-class transgressions. In fact, the jockeying for position across Wall Street departments, between the front and middle offices, between traders, quants, risk managers, and auditors, helps to also produce, enact, and maintain internal hierarchies within banking departments. Specifically, the construction of a structure of “puppet” regulation (not to mention “thankless jobs”) where those emplaced in a lower rung of the hierarchy are charged with “regulating” and “governing” those whose subjectivities and practices are not only valued by the larger firm, but upon whose interests the firm underwrites – creates an organisation where “boundaries” that are designed are deliberately meant to be circumvented. As such, unequal subjectivities and status, when combined with differently valued knowledge practices and frames, strongly construct what counts as finance, and who can make financialisation happen.

1Let’s make the company a bunch of figures

Professional representations in mergers and acquisitions firms

Valérie Boussard and Marie-Anne Dujarier

Following N. Fligstein and other academics anchored in New Economic Sociology allows the presentation of financialisation as “the ascendancy of shareholder value as a mode of corporate governance” (Krippner, 2012, p. 25). This ascendancy means that economic actors have changed the forms of analysis they use to find solutions to the current problems of organisations. The new forms intend to defend owners’ interests against managers’ interests and to develop strategies to increase the value difference between stock prices and equity, rather than the high rate of return on investments (Fligstein, 1990). This shift in corporate control conceptions reveals a transformation in market institutions i.e. in the cultural and normative construction of markets (Fligstein, 2001). As many scholars underline, it also sheds light on emerging finance-oriented actors, who support, promote, and disseminate these new norms (Fligstein and Brantley, 1992; Davis, 2005; Davis and Greve, 1997; Davis and Useem, 2002; Zorn, 2004).

The latter perspective paves the road for an analysis of these financial norms through an investigation of the way these new actors envision the core of their work and role. Scholarly works on traders (Godechot, 2001; Hassoun, 2005; Knorr-Cetina, 2005; Mac Kenzie and Millo, 2003; Muniesa, 2005), hedge fund investors (Montagne, 2006), stock market analysts (Sauviat, 2003; Montagne, 2009), investment bankers (Ho, 2009) and, investors (Useem, 1996; Zorn et al., 2005) have largely contributed to describe financial norms and logics from the inside. This chapter aims to participate in this description by investigating other financial actors involved in financialisation: advisors in mergers and acquisitions (M&A) who have taken on a growing part in corporate governance. If the number and volume of M&A has dramatically risen over the past 20 years, it has been linked with the development of new specialised occupations that undertake these transactions: investment bankers, auditors, financial counsellors, investing managers, etc. These occupations largely endorse and promote the shareholder value conception of control. Indeed, contemporary M&A are grounded upon a conception of the firm as a bundle of assets which are most of the time subsidiary companies. Each firm or each company is considered “as a stream of cashflows to be shuffled and reshuffled in whatever configuration would produce the highest return” (Krippner, 2012, p. 8). Firms are then seen as a set of companies that can be independently sold or bought.

The major hypothesis of this chapter is that the logics and norms these financial advisors share can be understood through an observation of their very daily work and of the multiple interactions in the workplace, replaced in the organizational and occupational context where work and careers take place. The chapter is therefore based on the results of a large qualitative investigation which was conducted between 2010 and 2013 in France (observations of work and 76 interviews with French M&A advisors; see box below).

The chapter concentrates on the professional representations of companies that financial advisors subscribe to in their work of buying and selling in French M&A firms. The term professional representations covers the set of images, frameworks, language, and meanings about the work to achieve, which is shared by a group of workers and which delineates its professional mandate. It demonstrates that the sector is dominated by the representation of companies as commodities. First, financial advisors describe companies as things to buy and sell in a competitive arena, depicted in a quantified and abstracted way; second, they do not reflect upon the consequences of such a categorisation, save upon their own professional stakes. This representation of companies leads then to the shaping of what is considered within this sector as “professionalism”: it plays a major role in the process of recruitment, selection, and promotion of workers in this sector, which tends to homogenise the sector around the same norms.

To begin with, the first section presents the sector of M&A by focusing on the division of work and on the career process. The second section emphasises that the role advisors have to hold leads them to represent the company as a commodity, which means to figure it out in a quantitative and abstract manner. Rooted in this quantification and abstraction process, the commodification of companies is encouraged by professional norms which value trading in an agonistic context between advisors and firms as the true professional game and fosters distance and coldness towards consequences of such a game for companies. The third section develops this link between professional norms and the changing nature of companies from concrete economic units to commodities within a market.

Sources

These findings were obtained from a qualitative research program focused on “Careers in Finance,” carried out in France between 2010 and 2013.

A total of 76 comprehensive interviews with the middlemen (51) and customers (25) of transactions were carried out in the financial district of Paris. These enabled mapping of the actors in this professional space, understanding how their tasks and actual activities are organised and tracking their professional trajectories. Participants were obtained through contacts of established contacts (sno...

Table of contents

• Cover
• Half-Title
• Series
• Title
• Copyright
• Contents
• List of figures
• List of tables
• Notes on contributors
• Foreword
• Acknowledgements
• Introduction: Financiers at work, financialisation on the march
• PART I:The boundaries of finance: Exclusionary process, social closure and inner regulation
• PART II:Passing through boundaries Introduction: Financiers as intermediaries in conversion to financial logics : Financialising economic activities
• PART III:Crossing boundaries Introduction: Individual careers as vehicles for financialisation : The financialisation of finance: The transformation of the French financial elite
• PART IV:Internal boundaries Introduction: Diversity, segmentation, stratification within financial occupations: Is sociology of finance a general sociology?
• References
• Index