#HBRLive: The Cost of Wall Street's Power

The growing influence of Wall Street on the American economy and corporate governance is a central theme in a recent discussion featuring Gautam Mukunda, a professor at Harvard Business School. Mukunda argues that the financial sector has gained unprecedented power over the past four decades, reminiscent of its dominance before the Great Depression. This shift has led to a culture where corporate managers prioritize maximizing shareholder returns, often at the expense of broader societal values and responsibilities.

Mukunda highlights the problematic nature of this focus on shareholder value, noting that it is not a legal obligation but rather a widely accepted belief among executives. He emphasizes that this mindset has resulted in harmful practices, such as wealth transfer from employees and customers to shareholders, particularly in the financial sector. He advocates for a redefinition of corporate responsibilities, suggesting that companies should aim to create value for all stakeholders, not just shareholders.

The conversation also touches on the need for regulatory reforms to address the distortions caused by the financial sector's power. Mukunda proposes measures such as reducing the size of banks deemed "too big to fail," implementing a Tobin tax on financial transactions, and re-evaluating tax incentives that favor debt over equity. He argues that these changes could help restore balance in the economy and encourage a more equitable distribution of wealth.

Overall, Mukunda calls for a leadership shift that recognizes the systemic issues within the financial sector and advocates for reforms that prioritize societal well-being over short-term financial gains. He believes that addressing these challenges is essential for fostering a healthier economic environment for all Americans.

#HBRLive: The Price of Wall Street's Power

5 Jun 2014

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How is the financial sector undermining business? Join us for a Google Hangout between HBR executive editor Justin Fox and HBS assistant professor Gautam Mukunda, author of the June article, "The Price of Wall Street's Power." http://hbr.org/2014/06/the-price-of-wall-streets-power/

RSVP and leave any questions you might have for the Q&A on this event page. And return here to +Harvard Business Review on G+ on Thursday, June 5, at 12pm EST.

#HBRLive #hangoutsonair #financialization #WallStreet 

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