Of insane forms. From collectives to management controlled organisations to shareholder value organisation: Building societies a case study

Talbot, Lorraine
June 2010
Journal of Banking Regulation;Jun2010, Vol. 11 Issue 3, p223
Academic Journal
In this article, I assert that when a number of the larger mutual building societies converted into PLCs, they began constructing and dealing in �insane forms� of financial products. As PLCs, they adopted the normative values of the prevailing corporate governance strategies of the time, which were strongly influenced by the American originating �law and economics� approach. In the context of corporations, this approach emphasised the importance of achieving high returns for shareholders, or more pithily, of achieving �shareholder value�. Converted societies therefore became �shareholder value� organisations (SVOs), which propelled them into a business orientation that was very different from that before conversion, and to that of building societies, which continued to operate as mutual societies. As a result, the converted societies adopted practices that made them more vulnerable to changes in the wider economy, to the extent that they became central casualties of the current economic crisis.


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