Seeing the Forest for the Trees: Finance and Managerial Control in the US Forest Products Industry, 1945-2008

Over the past three decades a significant change has taken place in the ownership structure of industrial timberlands in the United States. The once widely held belief that significant timberland ownership was a necessary ingredient for success in the forest products industry came to an end as millions of acres of productive land were sold from industrial forest products firms to institutional investment organizations, known as Timberland Investment Management Organizations (TIMOs) or Real Estate Investment Trusts (REITs). This dissertation examines this large-scale transfer of timberland ownership through a multi-level analysis of financialization and the rise of shareholder value ideology in corporate management. Part I of the dissertation provides a critical synthesis of these two literatures in order to construct a historical sociological framework for analyzing institutional change in modern corporations. Financialization is defined as a gravitational shift from productive to financial forms of capital accumulation. I then conceptualize the relationship between managers and shareholders as an institutional form of the broader social relation that exists between productive and financial capitalists. The shareholder value conception of managerial control is conceptualized as an ideological manifestation of the shift that took place in the relationship between these two sectors of the capitalist class that motivated and justified managerial decision-making in large non-financial corporations. Part II employs this framework to examine the historical development of the US forest products industry over the course of the second half of the 20th century. This includes an analysis of corporate land ownership strategies during the postwar era of managerial capitalism, the impact of the hostile takeover movement, and the rise of shareholder capitalism in recent decades. I argue that both the decision by managers to sell-off their timberland holdings and the growth of institutional investors seeking to expand their investment portfolios are directly related to the process of financialization. Furthermore, I conclude that the financialization of the US forest product industry led to favorable outcomes for financial interests, but has left the industry with higher levels of concentration, fewer employees, heightened risk, and declining profits