Cynthia E. Clark is an Assistant Professor, Management Department, Bentley University, Waltham, MA. E-mail: firstname.lastname@example.org.
Masquerading in the U.S. Capital Markets: The Dark Side of Maintaining an Institution
Article first published online: 1 MAR 2013
© 2013 Center for Business Ethics at Bentley University
Business and Society Review
Volume 118, Issue 1, pages 105–134, Spring 2013
How to Cite
Clark, C. E. and Newell, S. (2013), Masquerading in the U.S. Capital Markets: The Dark Side of Maintaining an Institution. Business and Society Review, 118: 105–134. doi: 10.1111/basr.12004
- Issue published online: 1 MAR 2013
- Article first published online: 1 MAR 2013
This article examines the work of professional service firms (PSFs) in their relationships with public corporations; work that is designed to ensure that investors and potential investors have information that will enable them to participate in the capital markets. Using an institutional theory lens, we view these efforts by PSFs as institutional maintenance work and specifically analyze their work related to policing (i.e., rating), enabling (i.e., tutoring), and embedding and routinizing (i.e., collaborating) that helps to support the capital market as a core institution in society. We illustrate how there is a “dark” side to each of these forms of institutional work that exists because of ongoing conflicts of interest within and between their work practices. This dark side has the unintended consequence of producing often biased information or information unavailable to many. When a crisis brings this bias to light, some repair is introduced but often not enough to alleviate the distortion. Our contribution is, therefore, to shed light on the dark side of institutional maintenance work and to explore why repair is increasingly necessary, but often only partially effective.