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Institutional Work and Complicit Decoupling across the U.S. Capital Markets: The Work of Rating Agencies

Published online by Cambridge University Press:  23 January 2015

Cynthia E. Clark  and
Sue Newell
Cynthia E. Clark
Affiliation:
Bentley University
Sue Newell
Affiliation:
Bentley University
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Abstract:

We focus on the core institution of the capital market and the institutional work of professional service firms that provide ratings on corporate issuers, initially in a bid to maintain this institution, which suffered when those involved relied solely on information from the issuers themselves. Through our analysis we identify a new type of decoupling—complicit decoupling. Complicit decoupling evolves over time, beginning with the creation of a new practice, here corporate ratings as a form of policing work, which emerges to help to maintain a core institution. This practice is then adopted, implemented and later becomes decoupled. Exposure does not undermine the legitimacy of the practice because external actors collude in the ‘window dressing’ and, because it has become normalized, only partial repairs are enacted. It is by nature field-level institutional work, benefiting the majority of the field and inherently involves a violation of promise keeping. We conclude with implications for managers and behavioral ethics researchers.

Keywords

institutional maintenance and policing workcomplicit decouplingcapital markets (U.S.)
Type
Articles
Information
Business Ethics Quarterly , Volume 23 , Issue 1 , January 2013 , pp. 1 - 30
Copyright
Copyright © Society for Business Ethics 2013

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References

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