Financializing the Non-financial Firm

Hosted by the Systemic Risk Centre

Sheikh Zayed Theatre, New Academic Building


Professor Katharina Pistor

Professor Katharina Pistor

Edwin B. Parker Professor of Comparative Law at Columbia Law School


Dr Eva Micheler

Dr Eva Micheler

Associate Professor, LSE Law School

Conventional accounts treat the firm as a site of production and surplus creation. Historically, the corporation was a critical vehicle for capital-intensive production; it shielded investors from liability and committing their capital to the firm for the long term. Over the past half century, the corporate form has been redeployed as a site for financialization, that is, a singular focus on financial returns irrespective of a firm’s business purpose.

In this lecture, Katharina traces the evolution of the corporation from a vehicle for raising capital into one for creating capital in the hands of shareholders. Four factors have been critical for this outcome: First, changes in rules governing corporate capital including dividend and rules on share-repurchases; second, the rise of institutional investors and their desire for stable cash flows; third, the transposition of structured (debt) finance to the balance sheets of non-financial firms; fourth, the fragmentation of business operation into corporate group structures domestically and transnationally. 

Meet our speaker and chair

Katharina Pistor (@KatharinaPistor) is the Edwin B. Parker Professor of Comparative Law at Columbia Law School and director of the Law School’s Center on Global Legal Transformation. Her research and teaching spans corporate law, corporate governance, money, and finance, property rights, comparative law, and law and development. She has published widely in legal and interdisciplinary journals and is the author and co-author of several books. She is the recipient of the Max Planck Research Award (2012) and of several grants including by the Institute for New Economic Thinking, and the National Science Foundation. She is a member of the Berlin-Brandenburg Academy of Science and a Fellow of the European Corporate Governance Institute.

Eva Micheler (@EMicheler) is Associate Professor in Law at LSE Law School and SRC Co-Investigator. Eva studied law at the University of Vienna and at the University of Oxford before joining the LSE Law Department in 2001. She holds the venia legendi from the University of Economics in Vienna. Her most recent book was published with Oxford University Press and is entitled Company Law – A Real Entity Theory.

More about this event

This lecture concludes the conference An Institutional Theory of the Firm, which takes place 16-17 June 2022 at LSE. If you wish to attend the conference, please follow the link for details. Both events are co-sponsored by the Systemic Risk Centre and the Law and Financial Markets Project.

Systemic Risk Centre (@LSE_SRC) was set up to study the risks that may trigger the next financial crisis and to develop tools to help policymakers and financial institutions become better prepared.

The Law and Financial Markets Project unites LSE Law School faculty specialising in in the law and regulation of financial markets. It provides a framework for co-operation with associated participants from outside academia to explore the interactions of law, regulation, financial markets and financial institutions, principally within the EU and the UK.

Twitter Hashtag for this event: #LSEFirmTheory

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