On the Importance of Analyzing Economic Scandals and Contemporary Economic Institutions: A Comment on Dobbin and Zorn

Dobbin and Zorn discuss the role that the rise of shareholder value has played in the behavior that led to the corporate scandals from 2001 and onwards, and they also discuss the link between the notion of shareholder value and malfeasance more generally. Their basic argument is that there is a distinct tendency for corporations that are operated according to the principles of shareholder value to engage in corrupt behavior. More precisely, in an attempt to live up to securities analysts’ predictions, they will falsify the books. Attempts to stop this type of behavior through legal means, such as the Sarbanes-Oxley Act, will not succeed since they do not eliminate the main reasons why the books are cooked in the first place.