The purpose of this essay is to provide an analysis of the financialization of the US business corporation. In particular I focus on the growing and changing influence of the stock market on corporate resource allocation. I argue that the key to the problem is the compensation of US corporate executives with unindexed stock options that reward them for stock-price movements that are driven by stock-market speculation and manipulation and that are justified by the ubiquitous ideology that the role of these corporate executives is to “maximize shareholder value”. Whereas speculation was the primary driver of the stock market in the last half of the 1990s into 2000, the primary driver over the past decade has been manipulation achieved through the allocation of massive sums of corporate cash to repurchases of a corporation’s own stock.
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