Engineering a financial bloodbath: how sub-prime securitization destroyed the legitimacy of financial capitalism

"This book investigates the origins and implications of the securitization crisis, described by the chief executive of ANZ as a "financial services bloodbath". Based on extensive interviews it offers an integrated series of case studies drawn from the United States, the United Kingdom and Australia. A central purpose is to not only chart what went wrong with the investment houses and why the regulatory systems failed, but also provide policy guidance. The book therefore combines the empirical with the normative. In so doing, it provides a route map to navigate one of the most significant financial and regulatory failures in modern times."

Understanding legitimacy in a changing global economy

In a knowledge economy where technologically mediated information plays an important role, greater understanding is required of its impact on organisational sustainability. This paper examines the link between mediated information within a global economy and its relationship to a key to long-term organisational success– legitimacy. Aligning organisational legitimacy and the demands of a range of internal and external stakeholders is a central concern for managers when challenges to legitimacy continue to arise. Particularly during times of internally or environmentally driven change, challenges are created for managers seeking to ensure their organisation avoids questioning about its legitimacy. This paper presents the proposition that the perceptions of collective opinion derived from mass media provide a lens to a global world upon which managers base decisions to protect and repair organisational legitimacy. Legitimacy is determined from a broad social arena that can cross national and international boundaries (Lomi, 2000). Experience of legitimacy concerns, therefore, are often outside the traditional realms of managerial knowledge, and experience and of local business association networks (Aldrich, 1999). While the organisational landscape has been changing, at the same time, mass media have increased the focus on bringing news about events, and interpretations of events, from a broad and even global social area (Mutz, 1998). In addition, electronically facilitated media have exposed both organisational stakeholders and managers to views and interpretations of the world more quickly and more explicitly than in previous times. This paper proposes a relationship between perceptions of collective opinion derived from mass media and organisational legitimacy in such an environment.

Constitutional legitimacy : an international ill and gap in the literature?

The central argument of this work is that “democratic constitutional legitimacy”[2] probably does not currently exist in the politics of any country internationally. This inherent problem in constitutionalism is an endemic governance problem most citizenries should be dealing with, only that we are not in a large extent doing so and haven’t been historically. This position was ascertained using a form of Beck and Grande’s (2010) cosmopolitan methodology in my doctoral thesis (which we shall return to). It is argued that every constitution is in need of considerable rethinking so as to bring its statutes in line with the interests of the plurality of individuals it oversees. Finally, this work attempts to show that research in this area of democratic constitutional legitimacy is lacking in the literature as only a few scholars presently engage the issue (namely Simone Chambers).

The legitimacy of graduated response schemes in copyright law

In an attempt to curb online copyright infringement, copyright owners are increasingly seeking to enlist the assistance of Internet Service Providers (‘ISPs’) to enforce copyright and impose sanctions on their users.1 Commonly termed ‘graduated response’ schemes, these measures generally require that the ISP take some action against users suspected of infringing copyright, ranging from issuing warnings, to collating allegations made against subscribers and reporting to copyright owners, to suspension and eventual termination of service.

International law and the regulation of violence : shifting perceptions of the legitimacy of the jus ad bellum?

International law’s capacity to influence state behaviour by regulating recourse to violence has been a longstanding source of debate among international lawyers and political scientists. On the one hand, sceptics assert that frequent violations of the prohibition on the use of force have rendered article 2(4) of the UN Charter redundant. They contend that national self-interest, rather than international law, is the key determinant of state behaviour regarding the use of force. On the other hand, defenders of article 2(4) argue first, that most states comply with the Charter framework, and second, that state rhetoric continues to acknowledge the existence of the jus ad bellum. In particular, the fact that violators go to considerable lengths to offer legal or factual justifications for their conduct – typically by relying on the right of self-defence – is advanced as evidence that the prohibition on the use of force retains legitimacy in the eyes of states. This paper identifies two potentially significant features of state practice since 2006 which may signal a shift in states’ perceptions of the normative authority of article 2(4). The first aspect is the recent failure by several states to offer explicit legal justifications for their use or force, or to report action taken in self-defence to the Security Council in accordance with Article 51. Four incidents linked to the global “war on terror” are examined here: Israeli airstrikes in Syria in 2007 and in Sudan in 2009, Turkey’s 2006-2008 incursions into northern Iraq, and Ethiopia’s 2006 intervention in Somalia. The second, more troubling feature is the international community’s apparent lack of concern over the legality of these incidents. Each use of force is difficult to reconcile with the strict requirements of the jus ad bellum; yet none attracted genuine legal scrutiny or debate among other states. While it is too early to conclude that these relatively minor incidents presage long term shifts in state practice, viewed together the two developments identified here suggest a possible downgrading of the role of international law in discussions over the use of force, at least in conflicts linked to the “war on terror”. This, in turn, may represent a declining perception of the normative authority of the jus ad bellum, and a concomitant admission of the limits of international law in regulating violence.

Learning or legitimacy? an exploration of business planning amongst Australian social enterprises

In recent years, the value of business planning for new business ventures and small firms has been the subject of debate amongst entrepreneurship researchers (Brinckmann et al 2010: 24). Drawing on institutional theory, a number of writers suggest that business planning is primarily used to confer symbolic legitimacy on businesses seeking investment and engagement from external stakeholders ( Karlsson & Honig 2009; Zimmerman & Zeitz 2002; Delmar & Shane 2004). In this sense, business planning may not have any significant effects on firm learning, but may be used as evidence of good business operations in order to attract external resources. Meta-evaluation of the available empirical literature contests this proposition, finding that both the symbolic and organisational learning effects of business planning influence small firm performance (Brinckmann et al 2010: 36) While social enterprise – which we define as organisations that exist for a public or community benefit and trade to fulfill their mission - the study of social enterprise is a nascent and pre-paradigmatic area of inquiry (Nicholls 2010). As a consequence, there has been relatively little empirical analysis of the nature or effects of business planning amongst social enterprises (for two exceptions, see exploratory studies by Hynes 2009 and Bull & Crompton 2006). In this paper, we examine business planning practices amongst Australian social enterprises. Drawing on a survey of 365 social enterprises conducted in 2010 and in-depth interviews with 11 social entrepreneurs and managers from eight social enterprises, we find that social enterprises report being more actively engaged in business planning activities than their mainstream business counterparts. Our exploratory research suggests that both legitimacy and learning drive business planning amongst social enterprises, although legitimacy is the stronger driver. Our results also suggest that, as multi-stakeholder businesses led by mission, business planning can serve unique communicative and relational functions for this business type.

Profit and organisational legitimacy in an emerging market

While there is common acknowledgement that the main aim of organisations is to maximise shareholder wealth, firms also have the obligation to manage the needs of a broader group of stakeholders as these firms are a product of social creation. In this study, we test the notion that the concept, profit, is fundamental to society’s perception of the firm in an emerging market, and the need for a firm to legitimise a level of profit. We evaluate the relationship between the readability of various components of corporate annual reports and the level of profit, and we also take into account the nature of disclosure (mandatory and non-mandatory), the size of the firm and the nature of setup (public enterprises and publicly listed companies). Our findings suggest that, as with developed markets, in emerging markets profit is indeed an important determinant of the nature of operations of a firm, and that firms consider readability of their disclosures in attempting to legitimise a level of profit.

Exploring perceived legitimacy of traffic law enforcement

The purpose of traffic law enforcement is to encourage compliant driver behaviour. That is, the threat of an undesirable sanction encourages drivers to comply with traffic laws. However, not all traffic law violations are considered equal. For example, while drink driving is generally seen as socially unacceptable, behaviours such as speeding are arguably less so, and speed enforcement is often portrayed in the popular media as a means of “revenue raising”. The perceived legitimacy of traffic law enforcement has received limited research attention to date. Perceived legitimacy of traffic law enforcement may influence (or be influenced by) attitudes toward illegal driving behaviours, and both of these factors are likely to influence on-road driving behaviour. This study aimed to explore attitudes toward a number of illegal driving behaviours and traffic law enforcement approaches that typically target these behaviours using self-reported data from a large sample of drivers. The results of this research can be used to inform further research in this area, as well as the content of public education and advertising campaigns designed to influence attitudes toward illegal driving behaviours and perceived legitimacy of traffic law enforcement.

Kaleidoscopes and contradictions : the legitimacy of social media for public relations

If the current discourses of progress are to be believed, the new or social media promise a kaleidoscope of opportunity for connecting and informing citizens. This is by allegedly revitalizing the fading legitimacy and practice of institutions and providing an agent for social interaction. However, as social media adoption has increased, it has revealed a wealth of contradictions both of its own making and reproduction of past action. This has created a crisis for traditional media as well as for public relations. For example, social media such as WikiLeaks have bypassed official channels about government information. In other cases, social media such as Facebook and Twitter informed BBC coverage of the Rio Olympics. Although old media are unlikely to go away, social media have had an impact with several large familybased media companies collapsing or being reintegrated into the new paradigm. To use Walter Lippman’s analogy of the phantom public, the social media contradictorily serve to both disparate the phantom in part and reinforce it...

Raising corporate social responsibility - The 'legitimacy' approach

Discussing the normative arguments for the development of corporate social responsibility (CSR) is difficult but important. It is difficult/ as any argument for this development could be detrimental if it seems that it could narrow the scope of innovation in business and becomes a barrier to companies' usual business cases. It is important, as the civil society actors need the theoretical basis to further the instances of corporate irresponsibility to societies in an articulated way. Given this background, this article presents a detailed discussion on the 'legitimacy' argument as a normative basis for rising CSR. It is an analysis that runs counter to the functionalist economic arguments that mostly focus on the financial stakeholders and consider only the (allegedly free) 'market' outcomes.

Evaluating consent and legitimacy amongst shifting community norms : an EVE Online case study

The legitimate resolution of disputes in online environments requires a complex understanding of the social norms of the community. The conventional legal approach to resolving disputes through literal interpretation of the contractual terms of service is highly problematic because it does not take into account potential conflict with community expectations. In this paper we examine the importance of consent to community governance and argue that a purely formal evaluation of consent is insufficient to legitimately resolve disputes. As online communities continue to grow in importance to the lives of their participants, the importance of resolving disputes legitimately, with reference to the consent of the community, will also continue to grow. Real consent, however, is difficult to identify. We present a case study of botting and real money trading in EVE Online that highlights the dynamic interaction of community norms and private governance processes. Through this case study, we argue that the major challenge facing regulators of online environments is that community norms are complex, contested, and continuously evolving. Developing legitimate regulatory frameworks then depends on the ability of regulators to create efficient and acceptable modes of dispute resolution that can take into account (and acceptably resolve) the tension between formal contractual rules and complex and conflicting community understandings of acceptable behaviour.