Corporate Financialization and Productive Capital Investment in Canada, 1980 – 2024 | WIP Seminar with Alicia Eads

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Corporate financialization refers to financial markets increasingly affect what non-financial firms do. Corporate financialization has had transformative effects on organizational forms and strategies in the U.S., with devastating consequences including mass worker layoffs and declining productive investment. Our understandings of corporate financialization are based its development in the United States, an account set in the “stagflation” economic crisis of the late 1970s. Since this crisis similarly impacted many advanced economies, the assumption is that corporate financialization has developed similarly and with similar consequences elsewhere. This paper addresses this assumption by examining the historical development of corporate financialization in Canada, from 1980 to 2024, and testing for effects of financialization on productive investment. Canada is an analytically useful case because, in key respects, it has a similar economy as the U.S. with one crucial difference—concentrated firm ownership. We theorize how this could have contributed to a muted development of corporate financialization and a less negative effect on productive investment. We use Standard and Poor’s Compustat-Capital IQ North American database, which provides extensive balance sheet and investment data on publicly listed firms. We find that Canadian non-financial firms have experienced a later and relatively mild version of corporate financialization, with the most advanced development occurring among service sector firms. Further, among service sector firms only, financialization negatively impacts productive investment. We discuss the implications of our findings for recent policy discussions on concentrated ownership and declining productive investment for Canada and other advanced economies.

Alicia Eads is an Assistant Professor at the University of Toronto’s Centre for Industrial Relations and Human Resources and the Department of Sociology. The motivation for her research, which spans several substantive areas, is to provide insight into the causes and consequences of economic inequality. In recent work, she has focused on the policy response to the housing market collapse in the United States. In ongoing work, she examines the process of financialization of various aspects of people’s lives and considers the promise of economic advancement as well as the potential for exploitation. One current project focuses on worker compensation and another on housing finance. She received a BA in Sociology and Psychology from the University of Iowa and a PhD in Sociology from Cornell University.