Corporate governance : A territorial approach

Until the 1980s, the finance industry was geographically and institutionally contained. The financial economy was relatively stable, and moreover, dependent upon the real economy. Now however, the increasing power of the financial markets is institutionalising the emergence of shareholders whose focus is increasingly narrowly upon the sole aim of financial return and who have less and less involvement in the social and territorial aspects of corporate activity. In short, the finance industry has managed to create a functional and spatial separation between business investors and owners, thereby laying the foundations of what is now referred to as corporate governance. This article posits that the elements which have made this separation possible are the growth of capital mobility/liquidity, the assertion of the principle of diversification and the growing complexification of financial channels. This puts investors at a remove, rendering them short-sighted and passive when it comes to businesses’ real (local) characteristics. At the same time, at this point of separation between the real and financial economies, the finance industry is becoming autonomous, gradually outstripping the real economy through a functional geography which enables it to short-circuit the spatial constraints of the real economy and defer the costs of competition onto local or national companies.