Our reports library contains the latest publications based on groundbreaking research by CRAFiC members.


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Assessing the impact of shareholder primacy and value extraction: Performance and financial resilience in the FTSE350

Summary: A new report by Professors Adam Leaver and Richard Murphy of Sheffield University Management School and Prof Colin Haslam and Dr Nick Tsitsianis of Queen Mary, University of London, examines the investment and productivity performance of large UK listed firms who make outsized distributions to their shareholders. This report builds on their earlier work (Baker et al 2020) which found a significant minority of large US based corporations made shareholder distributions in excess of their declared income earned over a ten year period.

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How hollowed-out firms manufacture their distributable profits

Summary: Adam Leaver and Richard Murphy examine the ‘hollowed-out firm’ which has been identified as a significant social and economic problem and how these firms disregard of the basic principles of financial resilience that emerged as the 2010s progressed.

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Against Hollow Firms: Repurposing The Corporation For A More Resilient Economy

Summary: The Covid-19 pandemic is revealing latent weaknesses at large, well-established companies who may now require state support. This report argues that those weaknesses pre-date the current pandemic and are a consequence of excesses in the non-financial corporate sector during the post-2008 economy. Those excesses include: i) historically high levels of dividends and buybacks which, in many cases, exceeded earnings and hollowed out reserves ii) the growth of low-prime debt, which risks being downgraded to junk in the current crisis and iii) a build-up of ‘fair valued’ assets, often intangible assets such as goodwill, which are vulnerable to write downs that could push firms into negative shareholder equity.

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Auditing with accountability: Shrinking the opportunity spaces for audit failure

Summary: In recent years a number of high-profile company failures have raised fundamental questions about the willingness and/or ability of auditors to exercise the professional scepticism necessary for the production of robust audits. This report, co-written by Adam Leaver at the University of Sheffield and Leonard Seabrooke, Saila Stausholm and Duncan Wigan at Copenhagen Business School, examines the causes of those failures and makes a series of recommendations on how to resolve them. The report argues that audit failure takes place within a particular configuration of economic, cultural and regulatory arrangements which create the 'opportunity spaces' for poor practice. Shrinking those opportunity spaces therefore requires a multi-dimensional response, including the structural separation of audit and non-audit functions, a more robust system of fines and the integration of a civil society voice into the reform process to prevent regulatory capture.

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Financial engineering and the productivity crisis

Summary: This project directly addresses the relation between financialisation, specifically financial engineering, and productivity. It complements existing analyses of the role of shareholder value pressures in encouraging corporate short- termism and low investment (Stockhammer 2006; Tori & Onaran 2018), specifically that i) shareholder distributions compete with investment (Lin and Tomaskovic-Devey, 2013), ii) excessive discounting disincentivises investment (Haldane 2015), and iii) higher returns from finance lead to a switching of investment from productive to financial sources (Orhangazi, 2008). To assess this, our project takes an interdisciplinary approach which bridges accounting and political economy to examine the accounting and law innovations used within the UK water industry before and after the financial crisis; so chosen because of its weak productivity performance post-crisis (Frontier Economics 2017; Riley et al 2018). These accounting insights may add a missing piece to the productivity puzzle: that when financial engineering proliferates, productivity declines.

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