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Shareholder value orientation, distribution and growth - short- and medium-run effects in a Kaleckian model

By Eckhard Hein


We discuss the effects of rising shareholder power on distribution and capital accumulation in a Kaleckian model. Increasing shareholder power is associated with decreasing managements' animal spirits, on the one hand, and increasing dividends distributed to shareholders, on the other hand. In the short run, increasing shareholder power may either have positive ('finance-led'), negative ('normal') or intermediate ('profits without investment') effects on capacity utilisation, profits and capital accumulation. In the medium run, the positive ('finance-led') effects may be maintained in a stable environment under very special conditions, whereas the negative ('normal') and the intermediate ('profits without investment') effects turn into cumulative disequilibrium processes with falling rates of capacity utilisation, profits and capital accumulation and rising debt- and rentiers' equity-capital-ratios. (author´s abstract)Series: Department of Economics Working Paper Serie

Topics: RVK QC 210 ; JEL E12, E21, E22, E25, E44, Shareholder value orientation / distribution / growth / Kaleckian models
Publisher: Inst. für Volkswirtschaftstheorie und -politik, WU Vienna University of Economics and Business
Year: 2008
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