Based on a direct observation study of eight CEOs of large corporations, this paper examines how control is exercised in an era of financial transparency. In particular, the impact and effects of the increasing power of shareholders (corporate governance, shareholder value) with regard to managerial practices are investigated. The results show that CEOs were to a great extent influenced by expectations from exchange market actors and that such expectations, in a modified form, were passed down the hierarchy. Senior managers were given discretion in their work, but their performance (on the basis of how well they met expectations) was closely watched. The exercise of control by setting and monitoring expectations resulted in some managers working to exhaustion, and also in conformity and non-constructive communication. At the end of the paper, the effects of shareholder value management are discussed in relation to the societal level regarding issues of governance ethics, organizational development and work–life balance. It is concluded that reciprocal expectations and their intended and unintended consequences deserve further study in order to increase the understanding of the dynamics of modern capitalism.
Market governance, financial innovation, and financial instability: lessons from banks’ adoption of shareholder value management