Finance theory often shapes managers’ vocabulary without changing their actual practice

Evidence

There are clearly cases probably many cases in which finance theory was invoked but in which the invocation had little or no effect on market processes. In the 1970s, for example, many U.S. investment managers learned to talk plausibly about “betas” and paid for beta books, but, as noted above, a good number of them may have understood “beta” in a different way from how finance theorists understood it. Many such managers also seem to have continued in their investment practice much as they always had done, trying to pick “winners,” to “buy low,” and to “sell high.” — Donald MacKenzie, An Engine, Not a Camera, 1136

Categorization

• XREF: Directly connects to the performativity thesis’s own boundary question — where performativity fails or is merely ‘surface’ — related to the misuse/appropriation literature in economic sociology. — connects to: Critical finance studies treat markets as discursively constituted rather than merely material — Aris Komporozos-Athanasiou, Speculative Communities: Living with…, 578; Financial theories can become true by guiding the practices they describe — Gerald F. Davis & Suntae Kim, Financialization of the Economy, 38; The CAPM aligned with practitioners’ intuitions yet could discipline investment managers — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 356 (+2 more)

Broader Connections

• German firms deployed shareholder-value rhetoric symbolically without full implementation #exemplifies (0.95) — Natascha van der Zwan, Making Sense of Financialization, 49