How accounting creates performative moments and performative momentum

Carl Henning Christner (Department of Accounting, Stockholm School of Economics, Stockholm, Sweden)
Ebba Sjögren (Department of Accounting, Stockholm School of Economics, Stockholm, Sweden) (School of Business, Stockholm University, Stockholm, Sweden)

Accounting, Auditing & Accountability Journal

ISSN: 0951-3574

Article publication date: 6 September 2022

Issue publication date: 19 December 2022




This paper aims to analyse the longitudinal performative effects of accounting, focusing on how accounting shapes the stability/instability of economic frames over time.


To explore the performative effects of accounting over time, a longitudinal case study narrates the transformation of a large, listed manufacturing company's financial strategy over 20 years. Using extensive document collection, the authors trace the shift from an “industrial” frame to a “shareholder value” frame in the mid-1990s, followed by the gradual entrenchment of this shareholder value frame until its decline in the wake of the financial crisis in 2008.


Our findings show how accounting has different performative temporalities, capable of precipitating sudden shifts between different economic frames and stabilising an ever-more entrenched and narrowly defined enactment of a specific frame. We conceptualise these different temporalities as performative moments and performative momentum respectively, explaining how accounting produces these performative effects over time. Moreover, in contrast to extant accounting research, the authors provide insight into the performative role of accounting not only in contested but also “cold” situations marked by consensus regarding the overarching economic frame.


Our paper draws attention to the longitudinal performative effects of accounting. In particular, the analysis of how accounting entrenches and refines economic frames over time adds to prior research, which has focused mainly on the contestation and instability of framing processes.



Christner, C.H. and Sjögren, E. (2022), "How accounting creates performative moments and performative momentum", Accounting, Auditing & Accountability Journal, Vol. 35 No. 9, pp. 304-329.



Emerald Publishing Limited

Copyright © 2022, Carl Henning Christner and Ebba Sjögren


Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at

1. Introduction

Recent research devotes considerable attention to the performativity of accounting (Vosselman, 2022). Such research has been inspired by Callon's (1998a) performativity thesis, which posits that economic theory “performs, shapes and formats the economy, rather than observing how it functions” (p. 2). Drawing on this work, accounting scholars have explored various economic phenomena, such as corporate strategy (Skærbæk and Tryggestad, 2010), sustainability (Cuckston, 2018; McLaren and Appleyard, 2020) and risk management (Themsen and Skærbæk, 2018; Vinnari and Skærbæk, 2014). This research has contributed to our understanding of accounting's performative role, showing how accounting helps establish new economic frames by rendering economic ideas and entities visible and calculable (e.g. Pucci and Skærbæk, 2020; Vesty et al., 2015; Warren and Seal, 2018) and by providing a “yardstick that ma[kes] it possible to distinguish between success and failure” (Georg and Justesen, 2017, p. 1,077; Kornberger and Carter, 2010). Pertinently, such new frames change conceptions of “what it means to be ‘economic’” (Muniesa et al., 2007, p. 3) and to act in rational and desirable ways. In this paper, we add to this line of inquiry by exploring the shifting performative effects of accounting over time.

While extant literature demonstrates how accounting participates in establishing new economic frames, less attention has been afforded to how such frames evolve over time. This is because previous research has often analysed “hot situations” (Callon, 1998b, p. 260), characterised by overt conflicts between different actors and knowledge claims. Drawing on the dual concepts of framing/overflowing (Callon, 1998b), scholars have probed how accounting creates and sustains controversies when mobilised by different actors (e.g. Jollands and Quinn, 2017; Skærbæk and Tryggestad, 2010; Themsen and Skærbæk, 2018) or causes overflows because only partial framing is provided (e.g. Cuckston, 2018; McLaren and Appleyard, 2020). To date, accounting research has emphasised the instability and contested nature of framing processes. Less attention has been directed to the role of accounting in stabilising and refining economic frames over time. This is somewhat surprising because the stabilisation of a particular economic frame can also be an important outcome of performativity processes (Callon, 2007). Such stabilisation leads to “cold situations” (Callon, 1998a, p. 260) characterised by less overt conflict and more general agreement about the main principles of a particular frame. However, cold situations still have critical performative effects as the stabilisation of an economic frame can create “lock-in” and “path dependencies” (Callon, 2007, p. 335), perpetuating and elaborating certain forms of behaviour. To fully understand the performative effects of accounting, it is thus necessary to recognise the dynamics of frame in/stability.

Being mindful of this and recent calls for research exploring the dynamics of the performativity of economic theories (e.g. D'Adderio et al., 2019; Garud and Gehman, 2019), this paper aims to explore the longitudinal performative effects of accounting and how accounting shapes the stability and instability of economic frames over time. We address this via a twenty-year longitudinal analysis of the transformation of a large, listed manufacturing company's financial strategy in terms of a shareholder value frame. Shareholder value theory, which rose to global prominence in the early 1990s, has been one of the most influential economic theories in contemporary history (e.g. Davis and Kim, 2015). Studies have shown how the associated primacy of shareholder value creation has had a profound impact on the espoused strategies and behaviours of many listed companies (e.g. Cushen, 2013; Ezzamel et al., 2008; Lazonick and O'Sullivan, 2000; van der Zwan, 2014). ManuCo provides a pre-eminent example of this. The company underwent a well-publicised strategic re-orientation – from being “shareholder value-sceptic” in the early 1990s to becoming one of the most “shareholder value-friendly companies [in the world]” as viewed by an influential capital market actor, American investment bank Morgan Stanley, in the mid-2000s (Lindskog, 2006; Lindskog and Martinez, 2005). This strategic re-orientation involved changes in the company's financial strategy, ultimately leading to a radical transformation of ManuCo's capital structure. This transformational process is our empirical focus. We trace how different accounting devices participated in performing shareholder value theory, articulating specific strategies for shareholder value creation in a company-capital market discourse that was characterised as being rational/desirable for ManuCo to pursue.

Our findings advance previous work on the performativity of accounting by drawing attention to accounting's different performative temporalities. First, we show how the introduction of accounting devices contributed to a rapid shift from an “industrial” to a “shareholder value” frame in the mid-1990s. We refer to this as a performative moment and discuss how accounting precipitated this frameshift by rendering shareholder value theory visible and calculable, enabling a new disciplinary power to be brought to bear on ManuCo's management. This extends previous studies, which have emphasised the slow and arduous processes of bringing about shifts between different economic frames (e.g. Jollands and Quinn, 2017; Warren and Seal, 2018). Second, we add to previous insights by explicitly conceptualising how the introduction of new accounting devices creates pivot points in contested change processes. We outline how accounting contributes to a performative momentum stabilising a shareholder value frame over time, resulting in more of a “cold situation” (Callon, 1998b, p. 260) wherein different actors agreed that shareholder value creation was the company's principal objective. These findings demonstrate how the ongoing stabilisation of a shareholder value frame had substantial performative effects, as a series of interrelated accounting devices enacted an ever-more narrow definition of what it meant to act in pursuit of shareholder value creation.

Our analysis of the role of accounting in frame stabilisation adds to previous studies, which have primarily highlighted efforts to establish or disrupt economic frames (e.g. Skærbæk and Tryggestad, 2010). The observed role of frame stability in the subsequent overflow of the shareholder value frame in conjunction with the financial crisis of 2008, develops previous insights focusing on how overflows emerge from contested, intersecting and partial frames (McLaren and Appleyard, 2020; Themsen and Skærbæk, 2018; Vinnari and Skærbæk, 2014). Given our empirical focus, our findings also offer a secondary contribution to the interdisciplinary literature on shareholder value (e.g. Ezzamel et al., 2008; van der Zwan, 2014) by clarifying the role of accounting in “actualis[ing]” (Callon, 2007, p. 320) specific strategies as shareholder value-creating in corporate-capital market discourse.

The remainder of the paper proceeds as follows. In sections two and three respectively, we outline previous research on performativity and shareholder value. We then describe our empirical setting and methods in section four before examining the role of accounting in the strategic transformation of ManuCo into a “shareholder value-creating” company in section 5. In section six, we conclude with a discussion of our findings and their contribution to the literature on performativity and shareholder value, followed by an outline of the main theoretical, methodological and practical implications of our study.

2. The role of accounting in performing economic theories

Michel Callon's (1998a, b) performativity thesis comprises the theoretical foundations of our paper. Callon's thesis was refined by his later work (Callon, 2007) and that of his colleagues (e.g. MacKenzie, 2006; Muniesa et al., 2007), as well as studies from the accounting discipline (e.g. Georg and Justesen, 2017; Skærbæk and Tryggestad, 2010). The performativity thesis posits that economic theories transform the world. Theory is not only a mirror of pre-existing practice; it is constitutive of practice also. While Callon (2007) has noted that economic theories often have predictive rather than merely descriptive elements, the issue at stake in the performativity thesis is how economic theories intervene in the world. And the concept of framing is central to this. Borrowing from Goffman (1974), Callon (1998b, p. 249) defines a frame as establishing “a boundary within which interactions – the significance and content of which are self-evident to the protagonists – take place more or less independently of their surrounding context”. He argues that when economic theories are “actualised” (Callon, 2007, p. 320), they become frames that mark the cognitive and technical boundaries within which certain forms of economic behaviour are rational and self-evident (Callon, 1998a). However, the frame in operation is not given as there are multiple possible framings of what becomes the “economic”. The performativity lens thus directs our attention to the framing processes establishing a particular economic frame.

One key characteristic in framing processes is the role of “calculative devices”, such as algorithms, valuation models, or accounting devices, in rendering economic theories actionable (Callon, 1998a). The performativity thesis stresses the heterogeneity of framing processes; frames are “co-performed” (Callon, 2007, p. 336) in interactions between different actors and devices within socio-technical assemblages. Accounting devices are ascribed an important role in these processes by Callon because they “shap[e], simply by measuring it, the reality that they measure” (Callon, 1998a, p. 23). Correspondingly, a growing number of studies have explored the role of accounting in performing various economic phenomena, such as strategy (Skærbæk and Tryggestad, 2010), innovation (Revellino and Mourtisen, 2015), risk (Themsen and Skærbæk, 2018; Vinnari and Skærbæk, 2014), costs (Jollands and Quinn, 2017) and sustainability (Cuckston, 2018; McLaren and Appleyard, 2020). Building on a long-standing sociological understanding of accounting as a “productive force” (Miller and Power, 2013, p. 558) influencing human behaviour (e.g. Burchell et al., 1980; Hines, 1988; Hopwood, 1990), this emerging body of research has elaborated the performative role of accounting devices in several ways that are relevant to the theoretical interests of this paper.

First, a central concern of these studies has been the constitution of accounting's performativity. With respect to this, studies have pointed to the ability of accounting devices to render entities and ideas calculable and visible in new ways (e.g. Pucci and Skærbæk, 2020; Vesty et al., 2015; Warren and Seal, 2018). That is, accounting provides imagery that can shift expectations and shape new imaginary futures (e.g. Lassila et al., 2019; McLaren and Appleyard, 2020). For example, Warren and Seal (2018) analyse negotiations between regulators and generators in Great Britain's electricity industry, wherein accounting participated in creating the image of a future capacity crisis. Other studies emphasise the ability of accounting to provide a legitimate “yardstick that ma[kes] it possible to distinguish between success and failure” (Georg and Justesen, 2017, p. 1,077; Cuckston, 2018; Faulconbridge and Muzio, 2021; Kornberger and Carter, 2010; Vesty et al., 2015). Georg and Justesen (2017), for instance, outline how developing a zero-energy calculation in the design of a corporate headquarter reshaped organisational relationships, imaginary futures and appropriate actions, based on a definition of good performance as “the future energy account showing – at least – a ‘zero’” (p. 1,066). Thus, part of the motivation for our study is a continuation of this line of inquiry, exploring how accounting performed shareholder value theory in our case.

Second, extant research has primarily examined how accounting participates in an unfolding of “hot situations” (Callon, 1998b, p. 260). These situations are characterised by controversy, as different actors challenge an established frame, putting it at risk of overflowing. Overflows comprise Callon's (1998b) sociological revision of the economic concept of externality. As such, frames are never complete; unexpected issues may arise causing them to be questioned or challenged. Viewing such overflows as “the norm” (Vinnari and Skærbæk, 2014, p. 496), previous studies have emphasised the unstable and contested nature of framing processes, foregrounding how accounting is mobilised by different actors in efforts to bring about frameshifts. Studies have shown, for instance, how accounting has been used to problematise existing frames and create impetus for alternative courses of action (e.g. Jollands and Quinn, 2017; Skærbæk and Tryggestad, 2010). Other studies have shown how partial frames (Cuckston, 2018; McLaren and Appleyard, 2020) have led to “unexpected” outcomes by making scandals and “adverse events” visible, prompting corrective actions (e.g. Themsen and Skærbæk, 2018; Vinnari and Skærbæk, 2014). Even in situations where accounting suppresses conflict between different actors, this is seen as a provisional outcome. Themsen and Skærbæk (2018) outline how a risk management system made it possible to hide long-standing disagreements about the size and urgency of certain risks – until the patchwork of adjustments that had shored up the risk management frame overflowed. Hence, the image emerging from the extant accounting literature is one where accounting fuels chronic overflowing “and, thus, practices are only provisionally stabilised” (Vinnari and Skærbæk, 2014, p. 491).

While these studies provide valuable insights into the dynamics of performativity, the emphasis on contestation and instability has understated the role of accounting in stabilising a particular economic frame over time. This is surprising given that foundational works addressing performativity stress that temporal stability is also a possible and important outcome of framing processes. The economic, as Muniesa et al. (2007, p. 4) put it, “is always an issue whose formulation partly depends on (but is not fully determined by) previous events and trajectories”. As particular economic theories are built into calculative technologies and infrastructure, this creates “lock-in” effects and “path dependencies” (Callon, 2007, p. 335) that “stabilize the forms and meanings of what is to be considered as economic” (Muniesa et al., 2007, p. 3). Such “durable irreversibilities” (Muniesa et al., 2007, p. 3) give rise to “cold situations” (Callon, 1998b, p. 261), characterised by general agreement regarding an overarching economic frame. However, this does not mean that there are no negotiations underway or that these situations will not affect economic behaviour. Rather, as Callon (1998b, p. 266) notes, there will be “cold negotiations” about the precise enactment of an established frame. As our analysis will show, this can have significant behavioural consequences over time due to an ever-more entrenched and narrowly defined script for economic behaviour.

Against this background, our paper aims to investigate how accounting participates in shaping both the stability and instability of economic frames over time. We explore this through a case study of the performativity of shareholder value theory, which has been characterised as one of the most influential economic theories in the last few decades (Davis and Kim, 2015; Ezzamel et al., 2008; van der Zwan, 2014). Informed by previous insights concerning the role of accounting in performing new economic frames, we focus on identifying when accounting devices articulated shareholder value as a concrete financial strategy, with desirable and actionable behaviours and how these accounts were mobilised or undermined. We combine this with a longitudinal approach examining the complex dynamic establishing and perpetuating a particular economic frame, creating “durable irreversibilities” (Muniesa et al., 2007, p. 3) and overflows. Before presenting the details of our case, we outline the main elements of shareholder value theory and review some of the interdisciplinary literature tracing its spread into corporate and capital market discourses and practices.

3. Shareholder value theory and corporate behaviour

Shareholder value theory posits that the primary purpose of a company is to create value for its shareholders (Rappaport, 1984). This idea has its roots in the work of agency theorists (e.g. Jensen and Meckling, 1976; Fama, 1980) who argue shareholder value provides a solution to the long-standing problem of goal alignment resulting from the separation of ownership and control in listed companies (Berle and Means, 1932). Agency theorists argue shareholders are entitled to all a company's residual returns as an incentive for providing risk capital. As corporate managers are presumed to be primarily interested in maximising their status or wealth, they need to be incentivised to act in the interest of shareholders. Making shareholder value creation the principal corporate objective is seen as the way of achieving this goal.

During the 1980s and 1990s, this basic theoretical idea was refined and disseminated by academics and consultants (e.g. Copeland et al., 1990; Rappaport, 1984; Stewart, 1991), who linked the objective of shareholder value creation to a variety of concrete business strategies. These strategies included concentration on core competencies, increased outsourcing, business restructuring through mergers and acquisitions and financial strategies such as increased debt financing and cash distributions to shareholders (e.g. Davis et al., 1994; Zorn et al., 2005). In this paper, we focus on financial strategy. Changes in financial strategy are seen as key to creating shareholder value. For example, Lazonick and O'Sullivan (2000) argued that shareholder value orientation entails a fundamental shift in the treatment of corporate profits; rather than being “retained and reinvested”, profits are to be “re-distributed” to shareholders. Likewise, Van der Zwan (2014) observed that “[w]hat sets the financialized corporation apart from its industrial-age predecessor is that the financial gains from these operations are not reinvested in the firm's productive facilities, but rather are distributed to shareholders through dividend pay-outs and share buybacks” (p. 108).

Several quantitative sociological studies have shown how companies undertook financial restructuring as shareholder value theory spread globally in the 1990s and early 2000s (Lazonick, 2010; Lazonick and O'Sullivan, 2000). While this is well-documented at an aggregate level, less is known about the more detailed processes through which this observed strategic shift was brought about and the role of accounting therein. In the sociological literature, most studies have linked increased shareholder value orientation to broader structural and cultural changes in capital markets, such as the rise of hostile takeovers, corporate buyouts and shareholder activism (Davis and Kim, 2015; van der Zwan, 2014; Zorn et al., 2005). These changed market conditions disciplined corporate managers, notably in companies that failed to live up to capital market expectations with respect to profitability (e.g. Froud et al., 2006; Gleadle et al., 2014; Williams, 2000). While such analyses have underscored the transformative effect of shareholder value theory at a market level, they offer limited insights into the dynamics of how specific and concrete strategies become enacted as “shareholder-value creating” at the corporate level.

In the accounting literature, attention has focused instead on how accounting is involved in implementing shareholder value-oriented strategies within companies. To illustrate, Ezzamel et al. (2008) studied how accounting calculations mediated a strategic focus on shareholder value and operational practices in a multinational conglomerate through various cost-cutting, outsourcing and divestment initiatives. Cushen (2013) found that budgets aided translating capital market expectations from top managers to employees in a knowledge-intensive company. Kraus and Strömsten (2012) showed how managers in four companies became more focused on short-term accounting results during the IPO process. Gleadle and Cornelius (2008) investigated how EVA was used to enact a shareholder value-oriented strategy within a production facility. However, less attention has been afforded to how accounting is involved in formulating the constitution of shareholder-value creating strategies, as well as framing such strategies as possible and desirable in company-capital market discourse. While studies have highlighted how accounting measures of profitability and returns play a general role in the narration of viable corporate strategies (Froud et al., 2006; Roberts et al., 2006), there is a lack of knowledge about how specific accounting devices participate in actualising localised “shareholder value-creating” strategies. Our study, therefore, examines and extends understandings of the performative role of accounting in corporate strategy by exploring how different accounting devices were implicated in the shareholder-value oriented transformation of a multinational manufacturing company's financial strategy over two decades.

4. Method

As outlined above, our paper investigates how accounting contributes to the in/stability of the performativity of economic frames over time. We do so by undertaking a case study examining shareholder value orientation in the context of a Swedish manufacturing company (referred to as ManuCo) over a twenty-year period.

Focusing on the enactment of shareholder value theory enhances our understanding of an important economic frame. Shareholder value theory is one of the most influential economic theories of the last few decades (e.g. Davis and Kim, 2015; van der Zwan, 2014), aligning the behaviour of listed companies with its theoretical assumptions and prescriptions (e.g. Ezzamel et al., 2008; Lazonick, 2010). It has been “entrenched” to the point that its tenets have been characterised as “ideology” (e.g. Lazonick and O'Sullivan, 2000, p. 13), despite vehement criticism in the aftermath of various financial crises (e.g. Yang and Modell, 2015). As such, shareholder value theory is a fruitful subject for studying the durability and fragility of economic frames as described by Callon (1998b, 2007).

Given our analytical interest, we consider ManuCo and its financial strategy as constituting a particularly relevant case for investigating how accounting destabilises/stabilises an economic frame over time. ManuCo underwent a well-publicised change in the 1990s and early 2000s: ManuCo changed from being a shareholder value sceptic, espousing an “industrial” view of the company's financial strategy, to one of the “most shareholder value friendly companies [in the world]” (Lindskog, 2006). This shift was accompanied by a radical transformation of the function and structure of its balance sheet. As elaborated below, for over a decade, ManuCo's management pursued a new strategic trajectory, which fundamentally reshaped the company's balance sheet and slashed its equity ratio from 64% in 1996 to 35% in 2007 (Appendix) [1].

Further, ManuCo is analytically interesting because of its ambivalent relationship with the prescriptions of shareholder value theory. On the one hand, the company was a large industrial conglomerate, a corporate form that proponents of shareholder value creation consider inhibits value-creation (Davis et al., 1994) [2]. On the other hand, ManuCo was highly profitable and successful – with a century-long history of operational and financial success (Fagerfjäll, 2012). This contrasts with other companies where a shift to shareholder value orientation was linked to profitability problems (e.g. Williams, 2000). Also, ManuCo had a largely stable ownership structure. Most of its shareholders were Swedish or international institutional investors, such as pension funds, with no indication of hostile takeover threats or shareholder activism. There was also low senior management turnover [3]. Taken together, this raises the vexing question of how such a dramatic change in the company's financial strategy occurred and the role of accounting therein.

ManuCo is situated in Sweden, where the company is headquartered and listed. The structure and character of the Swedish capital market has been methodologically helpful for our investigation. Sweden is a small, open economy with a disproportionately high number of multinational companies (Hellman, 2011). Its business culture is characterised by a form of “socialistic capitalism” emphasising long-term ownership. This differs from market capitalism that has been the historically dominant model for Anglo-American countries (Henreksson and Jakobsson, 2003). However, several political and regulatory changes in the 1980s, including changes to the public pension system and easier access to the Swedish capital market for foreign investors, made the Swedish capital market a more active and fertile ground for the idea of shareholder value creation. Indeed, studies have pointed to the strength of the shareholder value movement in Sweden during the 1990s and the early 2000s (Brodin et al., 2000; Lazonick and O'Sullivan, 2000; Tengblad, 2004). As in other parts of the world (Yang and Modell, 2015), the global financial crisis of 2008 marked a break in this developmental trajectory in Sweden (Eklund, 2012; Lönegård, 2013; van der Zwan, 2014). Thus, the development trajectory of shareholder value theory in the Swedish capital market can be situated in a limited period spanning 20 years, from 1990 to 2010. By following the enactment of shareholder value theory in this period, we are able to capture both the emergence of shareholder value as a dominant model for corporate behaviour in Sweden, along with its decline in the years immediately following the financial crisis of 2008. As our case analysis shows, this period reflects the development of ManuCo's commitment to shareholder value creation, which was formally articulated in the mid-1990s and then disrupted by the financial crisis of 2008. Also, the relatively small size of the Swedish capital market may be likened to an epistemic culture, where the expert practices of its professional participants (such as managers, accountants and financial analysts) display similar “aggregate patterns and dynamics” (Knorr Cetina, 1999, p. 8). This makes it a good site for undertaking a sufficiently detailed, longitudinal examination, allowing a plausible analysis of the role of accounting in performing and stabilising a particular economic frame.

An integral part of studying a framing process, as Skærbæk and Tryggestad (2010) have emphasised, is to follow various participant actors (see also Boedker, 2010). We have mobilised an extensive collection of “document trails” (Skærbæk and Tryggestad, 2010, p. 112) to trace two decades of changing discourse about ManuCo's financial strategies at the company-capital market interface. Archival material is a well-established source of “communicative evidence” in studies of historical processes (Fleischman et al., 1996, p. 61). Our analytically informed narrative sequence (Stinchcombe, 1978) was crafted using three types of documents. First, we collected material published by the company, including annual reports and corporate publications about ManuCo and its history. Second, we gathered newspaper articles about ManuCo from the local business press via the Retriever database. These articles were identified from keyword searches using “ManuCo” and “strategy” or “shareholder value”. After shorter notices of one paragraph or less were excluded, these articles amounted to approximately 1,600 Word pages. This material included interviews with company managers, investors and analysts, addressing ManuCo's financial performance, activities and plans and strategic alternatives. The most important sources, where much of the public discourse about ManuCo's financial strategy occurred, were the two leading Swedish daily business newspapers (Svenska Dagbladet Näringsliv and Dagens industri) and three prominent business magazines (Veckans affärer, Månadens affärer and Affärsvärlden). Third, we collected proprietary equity analyst reports written about ManuCo. Given its size and multinational operations, a sizeable number of domestic and international analysts covered the company during the whole period. In 1990, ManuCo was followed by 22 analyst firms, of which 12 were Swedish and ten were international. By 2005, ManuCo was followed by 28 analyst firms, of which eight were Swedish and 20 were international. These international analyst firms included some of the world's largest and most influential investment banks, such as Morgan Stanley, JP Morgan, Deutsche Bank and Barclays. Analyst reports were sourced through the Thompson research database. While this database is not exhaustive, it included a broad range of national and international analyst firms and investment banks at the time of data collection. In total, more than 1,000 analyst reports were reviewed.

Our analysis of this empirical material followed an iterative process (Lukka and Modell, 2010). The first step in the data analysis involved constructing a chronological account of the case based on a manual reading of the empirical material. A second step identified “critical episodes” related to the aims of this research (Miles and Huberman, 1994). A defining characteristic of a critical episode was high data intensity, evidenced by material from different sources devoted to discussing a specific issue/event. The material included several discernible debates between corporate management, analysts and journalists about which activities and strategies were possible and desirable for ManuCo. Refined keyword searches were then made of episode-specific terms and broader themes related to financial strategy and position emerging from the empirical material, such as “overcapitalisation”, “equity ratio” and “financial gearing”. In the third step of the analysis, identified episodes were explicitly theorised through an abductive process (Alvesson and Sköldberg, 2000), comparing our empirical findings regarding the role of accounting in establishing and shifting economic frames to insights from previous research. Drawing on a performativity lens, we then differentiated between two types of framing trajectories where accounting played distinct roles. The first trajectory, denoted as a “performative moment”, was observed in the comparatively rapid and dramatic frameshift following the public introduction of accounting devices making the cost of capital concept calculable, visible and actionable in the mid-1990s. The second trajectory, called “performative momentum”, played out over several episodes. Rather than being considered as a frameshift, this process involved successive refinement and reinforcement of the shareholder value frame. This process centred on the articulation and circulation of ManuCo's new target capital structure, along with various calculations of possible capital structures following from this. Finally, a narrative was crafted to present the case analysis (Parker, 1999). This is outlined in the following section.

5. Performing a shareholder value-oriented financial strategy

The following account traces the re-framing of ManuCo's financial strategy from an “industrial” to a successively more refined “shareholder value” frame. From our starting point in 1990, ManuCo had a “strong” balance sheet, which management argued was necessary to support the company's industrial operations. We then observed the emergence of a shareholder value discourse in the Swedish capital market during the early 1990s, following its mobilisation by equity analysts and other capital market commentators to criticise ManuCo's financial strategy. However, we find that this early criticism did not lead to a change in the ManuCo management's practices. It was only after the consultancy firm Stern-Stewart produced a ranking list using the Economic Value Added (EVA) calculation, which framed ManuCo as a “value destroyer” in the spring of 1996, that management's framing of the balance sheet shifted and a strategy of shareholder value creation was publicly adopted. We refer to this as a performative moment to indicate how accounting (in this case, the EVA calculation) had a transformative effect by rendering the balance sheet calculable in a new way. We then trace how the shareholder value frame was stabilised and further refined through the introduction of a series of accounting devices centred around a new financial target for the company's capital structure. We show how this created performative momentum that made the company's shareholder value strategy more defined and entrenched – until the shareholder value frame broke down in the wake of the financial crisis in 2008.

5.1 The starting point: an industrial framing of financial strategy and the role of the balance sheet

ManuCo entered the 1990s with a “strong” balance sheet, characterised by sizable cash holdings and a high equity ratio (Appendix). This balance sheet structure was commensurate with the company's financial strategy, which emphasised the need for financial strength to protect the operations against cyclical swings in its product markets. The company's strategic focus was formulated based on experience from past decades when ManuCo had expanded rapidly through acquisitions. While initially successful, a global downturn subsequently led to a dramatic fall in sales. In 1983 the company reported a loss for only the second time in its more than 100-year history. Consequently, a new management team was appointed and the company's strategy was revised. The previous focus on growth through acquisitions was supplanted by a focus on cost savings and using profits to build a stronger balance sheet. When the business climate improved in the late 1980s, ManuCo reported record profits and began to amass cash. By the end of 1989, ManuCo had a net cash position equivalent to approximately 25% of the total assets and an equity ratio of over 50%.

Management argued a “strong” balance sheet was invaluable because it protected the company's core industrial operations, giving “the company room to maneuverer in a crisis” as one influential business journalist commented (Herlitz, 1990). ManuCo's CEO noted similarly that “the old saying ‘cash is king’ will come into its own” (ManuCo, 1991) in the event of an economic downturn, as it would protect the company from having to make short-term decisions that may adversely affect the company's operations and long-term growth prospects. Furthermore, a “strong” balance sheet presented opportunities to make acquisitions improving the company's market position. The lower prices of acquisition targets in the wake of a weakening business climate in the early 1990s meant that management was now “looking to use our cash for strategic acquisitions”, as the CEO put it (Ericsson, 1992).

Initially, equity analysts and other capital market commentators agreed that ManuCo's “strong” balance sheet protected the company's operations from an economic downturn and enabled market-strengthening acquisitions (e.g. James Capel & Co, 1990). However, the company's financial strategy was increasingly criticised by analysts, investors and business commentators mobilising the language of shareholder value theory, which had entered Swedish capital market discourse in the early 1990s.

5.2 The emergence of a shareholder value discourse: capital market actors use shareholder value theory to criticise ManuCo's “strong” balance sheet

Initial articles published in Sweden regarding “the new American way of evaluating companies” equated shareholder value theory with the active use of a balance sheet to create value for shareholders through increased dividends (Gartell, 1991). This view was increasingly incorporated into rhetoric used by equity analysts and other commentators. As ManuCo's management failed to deliver on a promise to conduct large acquisitions, there were frequent calls for the management to “do more” with the company's financial resources (Rosen, 1991). Increasingly, the company's “strong” balance sheet was deemed problematic, as a report by the influential Swedish investment bank Enskilda Securities argued:

The company still has a huge cash position and we believe that investors will find this unattractive, since part of the re-valuation of [ManuCo] was based on the fact that the company was to do exciting deals with its cash position. […] Increasingly, we believe that the market, instead of valuing the cash position at a premium, will not pay a premium or even require a discount. (Hansson, 1993)

The report then argued that management should either make “a more aggressive move” in the form of a large acquisition or “increase the dividend payments” to shareholders (Hansson, 1993). A similar sentiment was expressed even more strongly in an editorial in the leading business newspaper, Dagens industri:

For years the market has faithfully paid an ever-higher price for the [ManuCo] share in expectation of a large acquisition. While waiting for this acquisition, [ManuCo] has been allowed to keep a large cash holding of 4.5 billion [SEK] … But now this cash holding is starting to become an imposition. […] The investors require that ManuCo acquires complementary businesses to fend off stagnation … [or] distributes the cash to the shareholders … Today, it is almost a theft of the shareholders' money to keep 4.5 billion in cash in the company. (Dagens industri, 1993, authors' translation; emphasis added)

These quotes illustrate the mounting pressure on ManuCo's management to actively use the company's balance sheet to “create shareholder value”.

In response to this growing criticism, management presented a new business strategy in the summer of 1994. The new strategy was “prompted” by concerns in the financial market over the company's capital structure (Åsberg, 1994). However, instead of pursuing the strategic actions favoured by capital market actors – acquisitions or increased dividends – management proposed to use the company's cash holdings to boost the company's organic growth through investments in emerging markets in Asia and Eastern Europe. It was argued these investments would create value for shareholders over the long run as they would lead to a “doub[ling of] the company's sales and profits in a decade” (Rylander, 1994; authors' translation).

Capital market reactions to this proposed strategy were largely negative. While many analysts and commentators approved of investments in emerging markets, it was reiterated that the company could and should use its financial strength to create shareholder value through acquisitions or increased dividends. For instance, a report by Enskilda Securities concluded that “we cannot see how the company will need a large proportion of its financial resources for these investments [linked to the new strategy]” (Hansson, 1994). Similarly, the head of one of ManuCo's largest shareholders, a Swedish pension fund, wrote an opinion piece in the business press arguing that several named Swedish companies, including ManuCo, were “overcapitalised” and needed to immediately “distribute their excess cash to the shareholders” (Olsson, 1994).

Yet, this stark criticism had little apparent impact on management's “industrial” framing of ManuCo's financial strategy. In response to the aforementioned opinion piece, ManuCo's CEO noted that while the company's cash holdings were “possibly a bit on the high side”, he saw no need to distribute the cash to shareholders as “we have concrete plans for what to do with our money … and we can invest them to generate profits in our business” (Olsson, 1994). It was not until EVA was introduced a few years later that the framing of ManuCo's financial strategy and the purpose of the company's balance sheet, shifted.

5.3 A performative moment: EVA performs ManuCo as a “value destroyer”

The EVA calculation was originally developed by the American consultancy firm Stern-Stewart to measure companies' shareholder value creation (Stewart, 1991). This new accounting device was heavily promoted in Sweden in the mid-1990s and received significant attention in the Swedish business press. The main message on EVA's introduction was that investors and managers using traditional performance measures, such as profit and earnings per share (EPS), were “missing the crucial cost of equity capital” (Björk, 1995; authors' translation). It was argued that shareholders needed compensation for the risks they took. Therefore, an accurate measure of companies' shareholder value creation needs to include “the cost of all the capital that the company is using, including the capital the shareholders have invested” (ibid.). Specifically, EVA was calculated by comparing a company's operating profit with its cost of capital:


Thus, the EVA calculation provided a new way of calculating the balance sheet: it ascribed a cost to equity and made debt relatively less costly.

For ManuCo, this new conception of the balance sheet became significant in the spring of 1996, when a ranking list produced by Stern Stewart received much attention in the Swedish media. This list evaluated the “value creation” of Swedish companies, between 1990 and 1994, using the EVA calculation. To widespread surprise, it characterised some of Sweden's most respected companies as “value destroyers” (Sandlund, 1996; authors' translation). Specifically, the ranking list showed that ManuCo had created a positive EVA in only one of the five years measured – even though the company had reported a sizable profit each year. Stern Stewart pointed to ManuCo's high equity ratio, which had climbed to 64% (Appendix), as the main reason for the company's substandard performance.

Stern Stewart's analysis added fuel to longstanding calls for ManuCo's management to use its cash holdings. For instance, a commentary in the business magazine Affärsvärlden (1996) referenced the ranking list to argue that ManuCo needed to urgently re-structure its balance sheet to create shareholder value:

In the case of [ManuCo] the main reason [for the company's poor showing in the Stern Stewart ranking list] is that the company's capital structure, with a very high equity ratio, is only ostensibly prudent. Equity capital is expensive. If [ManuCo] distributed a substantial proportion of its equity capital and increased the share of debt capital, the company could lower its cost of capital significantly and create much greater value for its shareholders. (Authors' translation)

Similar arguments were also made in several analysts' reports that referenced EVA and the similarly structured free cash flow (FCF) model. Using these new accounting devices, analysts began commenting on how ManuCo's “high cost of capital … was hurting the company's valuation” (Phillips and Hull, 1997) and how it was “critical to improve … the unwieldy balance sheet structure” (Franklin, 1997). Thus, a shareholder value framing of the company's balance sheet, which now incorporated specific cost of capital calculations, became established in the (Swedish) capital market.

As this new framing of ManuCo's high cost of capital was established and increasingly perpetuated by analysts and commentators, it also came to influence how management conceptualised and talked about the company's balance sheet. Senior managers now described the company's balance sheet as “overcapitalised” (ManuCo, 1998), acknowledging that there was a need to “improve the company's capital structure … [by] reduc[ing] the equity ratio” to “create shareholder value” (ManuCo, 1997). ManuCo's CEO noted that this shift in management's view was partly driven by escalated criticism of ManuCo's “strong” balance sheet, leaving them “feeling a need to improve the company's capital structure” (Svensson, 1997). In a subsequent interview, ManuCo's CFO explicitly linked this perceived need to improve the company's capital structure to the Stern-Stewart ranking list, noting that management had learned that “debt is cheaper than equity” and “it is therefore better to have a net debt position than a net cash position” (Larsson, 1997; authors' translation).

This episode shows the transformative effects that specific accounting devices can have in mediating the performativity of an economic theory. The rhetoric of shareholder value creation was used for several years by capital market actors to argue a need for ManuCo to change its financial strategy. Yet, it was not until the EVA calculation (and to a lesser extent, the FCF calculation) “actualised” (Callon, 2007, p. 320) this theory, through a cost of capital concept characterising ManuCo as a “value destroyer”, that there was a shift from an industrial to a shareholder value framing of the balance sheet and its function. ManuCo's management then espoused a commitment to become “shareholder value-oriented” (Vilenius, 1999; authors' translation), acting rapidly to change the company's capital structure. In addition to adopting a new “aggressive” dividend policy in 1996 (ManuCo, 1997), the company completed three large acquisitions in 1996 and 1997 and a large share redemption in 1997. As a result, ManuCo's net cash position was transformed into a net debt position and the equity ratio was reduced by more than 25%, from 64% at the beginning of 1996 to 47% at the end of 1997 (Appendix). But ManuCo's transformation into a “shareholder value-creating” company was not over.

5.4 The momentum of the “shareholder value” frame builds: management introduces a new financial target for the balance sheet

There was consensus among capital market actors and corporate managers regarding the primacy of shareholder value creation as a corporate objective, with ManuCo's management undertaking further actions to re-affirm their commitment to this objective (ManuCo, 2001). Notably, management introduced a new target for the company's capital structure in the spring of 2000. This was the first time management had publicly presented such a target. The target signalled a refined management view of the balance sheet, incorporating a cost of capital logic and valorising debt over equity. Specifically, the new target was expressed in terms of the debt-to-equity ratio, also known as the gearing ratio. This target indicated that ManuCo should have a debt-to-equity ratio of 0.6–0.8. This was significantly higher than the extant debt-to-equity ratio of 0.3. Thus, the new capital structure target indicated a willingness to assume more debt.

When the new target was announced, management explained that increased debt financing was primarily aimed at creating shareholder value through acquisitions, while extraordinary cash distributions to shareholders were at the “bottom of the management's action list” (Näslund, 2000). However, this new target enabled capital market actors to calculate and compare ManuCo's current debt and level of cash flow generation with imagined future versions of the company. Using such calculations, several analyst reports argued that the new capital structure target created both the scope and responsibility for senior management to increase cash distributions to shareholders, either through dividends or share repurchases. For example, a report by Deutsche Bank argued that:

Given this rate of cash generation, [ManuCo] could be almost totally de-geared by the end of the forecast period unless measures are taken (buyback and/or acquisition) to absorb the flow. It is worth noting that one of the objectives that the management has committed itself to is a balance sheet gearing ratio of 60–80%. (Cusack et al., 2000; emphasis added)

The new capital structure target focused discourse about ManuCo's financial strategy within the overarching frame of shareholder value: it shifted attention to how well ManuCo used an increased appetite for increased debt financing to re-distribute cash to its shareholders. In subsequent years, analysts and other commentators regularly followed up on management's delivery of this target.

However, reaching the capital structure target proved difficult due to ManuCo's strong generation of operating cash flows. Despite increased dividend payments and several large acquisitions in 2002 and 2003, the company's financial gearing remained far below target. This prompted calls for management to start buying back shares sooner rather than later:

Despite the aggressive dividend pay-out, we estimate that [ManuCo's] gearing will fall to only 22% by 2004 [due to the strong operating cash flow generation]. We think that there will likely be some more bolt-on acquisitions during the next couple of years, but there should still be plenty of room for more share buy-backs. […] We expect ManuCo to start buying back shares in late 2002 or early 2003. (Fagerlund et al., 2002)

While these share buy-backs failed to materialise, a weakened business climate and higher pay-out ratio contributed to raising ManuCo's debt-to-equity ratio to 0.57 by the end of 2003. This was just under the lower end of the target interval. However, many analysts maintained that there was ample room for ManuCo to further increase its financial gearing. A report by UBS (Fagerlund et al., 2004a), for instance, addressed the “balance sheet problem”. The report emphasised that ManuCo's balance sheet was “still too strong”, arguing that the company needed to “maximise” its financial gearing to create shareholder value. Calls for more aggressive financial gearing grew stronger when ManuCo's management revised the capital structure target interval in early 2004, from 0.6 to 0.8 to 0.5–0.7. This change was seen as a clear deviation from the “economic” behaviour prescribed by the shareholder value frame (Callon, 1998a). Tellingly, another report by UBS (Fagerlund et al., 2004b) concluded that lowering the capital structure target was an irrational course of action: it “sent a negative signal to the market as we fail to see the financial logic behind it” (emphasis added). This illustrates how the shareholder value frame had become stabilised and further refined through the articulation and circulation of ManuCo's capital structure target (and associated calculations), with the maximisation of financial gearing becoming a sign of shareholder value creation.

In the fall of 2004, ManuCo's management launched a share repurchase program to meet the capital structure target. An editorial in Svenska Dagbladet Näringsliv noted how “management experienced the company's growing cash reserves as a problem … [since] the debt-to-equity ratio was too low (in relation to the capital structure target) and that the company was therefore seen as ‘overcapitalised’” (Ollevik, 2004; authors' translation). The new share repurchases increased ManuCo's debt-to-equity ratio to 0.7 (the upper limit of the debt-to-equity target interval). Several analyst reports expressed satisfaction that management had “accelerated the pace of capital return to shareholders” (Fielding and Adams, 2005), with the share repurchase program being characterised as an example of how the company's “shareholder-friendly management” was willing to listen to the market (Paton et al., 2005).

However, the requirement for ManuCo to satisfy its commitment to shareholder value creation did not stop there. Whereas the company had been criticised previously for not reaching its capital structure target, the problem now was that the company had reached the target. This meant that there was “limited scope to surprise with further cash returns to the shareholders”, as one report by Credit Suisse First Boston concluded (Marshall et al., 2005). Another report by Morgan Stanley similarly argued this lack of scope for extraordinary dividends placed ManuCo at a disadvantage compared to certain peers: “… we do not expect anything beyond the ordinary dividend to be distributed to shareholders over the coming years, meaning that the company lacks the defensive spice that we identify in, for instance, [Competitor 1] and [Competitor 2]” (Lindskog and Martinez, 2005). Thus, ManuCo's balance sheet structure meant that the company could not fulfil the expectation of a “shareholder value-friendly” company, routinely paying extraordinary [sic!] dividends to its shareholders. The proposed solution was for the company to “use its operational strength [and profitability] … to releverage the balance sheet”, making it possible to increase cash distributions once again (Lindskog, 2006). Here, we see a further entrenchment and refinement of the shareholder value frame, where ever-more debt financing was positioned as a viable and valuable action to pursue.

In line with this evolving shareholder value frame, ManuCo's management revised the company's capital structure target at the beginning of 2007, increasing the target interval from 0.5 to 0.7 to 0.7–1.0. In an interview, the CEO explained that the new target was part of the company's “continued commitment to creating shareholder value” (Almroth, 2007). He further noted that ManuCo's “strong operating performance over the last few years … [and] the less cyclical nature of its businesses” made it possible to operate with higher financial gearing, creating the opportunity “to reward the shareholders” further with an extraordinary dividend (Almroth, 2007). This cash distribution to shareholders immediately brought the company's debt-to-equity ratio up to the upper limit of the revised target interval. Thus, in the decade following the initial frameshift in the mid-1990s, ManuCo's capital structure had undergone a further transformation: between 1998 and 2007, the equity ratio was reduced by another 25%, from 47% to 35% (Appendix).

It is important to underscore that this change – which was similar in size to the reduction observed in conjunction with the shift from an “industrial” to a “shareholder value” frame – was facilitated by “cold negotiations” (Callon, 1998b, p. 266) occurring within the shareholder value frame. Moreover, the role of accounting in building continued momentum for the shareholder value frame was different from that played by accounting in bringing about a shift in frames. Earlier, we saw how the circulation of new accounting devices (EVA in particular) actualised shareholder value theory through cost of capital calculations and shifted understandings of ManuCo's balance sheet. Here, we see how this calculative logic and the shareholder value frame was reinforced and refined by the introduction of additional accounting devices, starting with the public debt-to-equity target introduced by ManuCo's management. This new capital structure target set in motion a new series of calculations and discussions, which gradually performed a more narrowly defined framing of a “shareholder value-creating” balance sheet. It was not enough to reduce “overcapitalisation” to create shareholder value; now financial gearing needed to be “maximised” and any “excess” cash distributed to shareholders. While we observed disagreements between ManuCo's management and capital market actors in this period, these debates did not reflect contestations between frames but rather different positions regarding the precise enactment of a shareholder value frame. This shareholder value framing of ManuCo's balance sheet remained firmly entrenched and unquestioned – until it overflowed in the wake of the global financial crisis of 2008.

5.5 The shareholder value frame breaks down

The rapid downturn in the global economy following Lehman Brothers' bankruptcy in September 2008 had a dramatic impact on ManuCo. As business ground to a halt, the company's sales and profitability plummeted and, in 2009, ManuCo reported a loss for only the third time in its history (Appendix).

For capital market actors, ManuCo's reduced sales and profitability made the company's leveraged balance sheet a threat to shareholder value creation. Analysts worried that the company's financial gearing was now so “stretched” that it made future acquisitions and share repurchases impossible. One report by Royal Bank of Scotland (Bergelind and Burke, 2009) concluded that: “There are no immediate funding issues, but we see stretched gearing as a clear negative compared with [ManuCo's] peers […] [W]e favour companies that can make acquisitions”. Even more troubling, the report noted a risk that the company would have to cancel its dividend to remedy a “weak” financial position. Still, this was considered to be an unlikely course for management to pursue, as it would be at odds with the shareholder value frame: “[W]e do not expect [ManuCo] to do away with the dividend because that could create severe adverse sentiment about [the company's] ability to generate shareholder value” (Bergelind and Burke, 2009).

For ManuCo's management, the crisis was viewed as even more severe. As the CEO explained, the company's high gearing necessitated an immediate and singular focus on improving the company's cash position: “it was a matter of survival, plain and simple” (Blomgren, 2010a). Starting in the fourth quarter of 2008, the company initiated a series of far-reaching cost-cutting programs, slashing investments in production facilities and executing a 20% workforce reduction to improve cash flow (ManuCo, 2010). Yet, these actions failed to remedy the company's financial position. Therefore and despite “adverse sentiment” in the capital market, management lowered ManuCo's dividend by 20% in 2009. This was followed by a 70% cut in 2010.

Lowered dividend payments meant that ManuCo had “lost its shine” according to a report from Société Generale (Gruter et al., 2010), with ManuCo's “weak” balance sheet deeming it a poor creator of shareholder value. A report by Chevereux concluded: “Considering that the CEO wants to continue to reduce gearing, we believe there will be little room for earnings enhancing acquisitions or cash returns to shareholders and thus we are now downgrading [ManuCo] to Underperform” (Eliason, 2010). Despite such adverse reactions, management continued to pursue a new framing of the company's financial strategy. For the foreseeable future, “cash flows needed to be prioritised over profitability”. Management would adopt “a more restricted stance towards acquisitions … [and] cash distributions to the shareholders”, the CEO stated in an interview in Dagens Industri (Blomgren, 2010b). The debt-to-equity target was now being explicitly disregarded because financial leverage was considered “too high” (ibid.).

In sum, the financial crisis of 2008 set in motion events leading to a collapse of a shareholder value framing of ManuCo's financial strategy. Yet, the breakdown of the shareholder value frame did not occur because the frame failed to perform. Rather, as we have shown, momentum created over the previous decade had enacted a version of ManuCo's financial strategy that was hailed as a model of shareholder value creation in the capital market (e.g. Lindskog, 2006; Lindskog and Martinez, 2005). And it was precisely this sustained and robust performativity of shareholder value theory that made the company vulnerable to the sharp economic downturn that followed in the wake of the financial crisis. In other words, the shareholder value frame overflowed because it had been stabilised and performed over an extended period (Callon, 1998b).

5.6 Epilogue: the re-emergence of an “industrial” frame

Since the collapse of the shareholder value frame, ManuCo's shifting management teams have emphasised a pursuit of a “balanced” financial strategy. While the rhetoric of shareholder value creation has remained in communications with the capital market (e.g. ManuCo, 2019), it has been more muted. Comparatively greater emphasis has been placed on the “long-term sustainability” of the company's operations (ManuCo, 2020). Also, the company has adopted a more restricted approach to acquisitions and cash distribution.

In the years immediately following the financial crisis, ManuCo's management sought to deleverage the company's balance sheet. Dividends remained substantially lower than before the crisis and there were no further share repurchases. To preserve cash, the company also abstained from any large acquisitions. Yet these efforts were not enough to shore up ManuCo's financial position, as the company's operating performance continued to fall below expectations. Analysts remained concerned about the company's leveraged balance sheet. For example, a report by JP Morgan in 2016 argued that the gearing was still “too high … for a business that retains the cyclical characteristics that [ManuCo] has” (Wilson et al., 2016).

When a new CEO was appointed in 2016, even greater emphasis was placed on improving the company's capital structure in line with an “industrial” frame that highlights the importance of protecting the company's operations. A new financial strategy was adopted, with the core involving “strengthening the balance sheet … [to] secure financial stability” (ManuCo, 2017). The old capital structure target was replaced by a new target stating that ManuCo should maintain a debt-to-equity ratio below 0.5. A series of further cost-savings initiatives were also initiated, including a lowered level of investments and working capital reduction programs. These actions, coupled with stronger operating performance, led to rapid improvements in ManuCo's capital structure. By the end of 2021, the company's debt-to-equity ratio had been reduced to 0.2, corresponding to an equity ratio of 50%. Correspondingly, ManuCo's capital structure was (again) reminiscent of that from the early 1990s (Appendix).

6. Concluding discussion

This paper has examined how various accounting devices framed the conception of a valuable financial strategy for a multinational manufacturing company over 20 years. The study analysed the role of accounting in mediating a shift from an “industrial” frame to an ever-more entrenched and narrowly defined “shareholder value” frame. The contributions arising from our paper are discussed below.

6.1 Accounting and performativity

The main finding from our study is that accounting devices performed the shareholder value theory with different temporalities. First, we found that accounting played a role in bringing about a rapid shift from an industrial frame to a shareholder value frame in the mid-1990s. In our case, the EVA calculation “actualised” (Callon, 2007, p. 320) shareholder value discourse by forging a direct link between shareholder value creation and the cost of capital. This provided a strong impetus for longstanding calls to change ManuCo's financial strategy, prompting decisive managerial action to “improve” the company's capital structure. The result was a sizable decrease in the company's equity ratio, which dropped from 64% to 47% between 1996 and 1997 (Appendix). We denote this as a performative moment to highlight the transformative effect that the introduction of new accounting devices can have on ongoing framing processes. The notion of a performative moment highlights how accounting can precipitate sudden shifts in the conception of “what it is to be ‘economic’” (Muniesa et al., 2007, p. 3). This finding develops insights from previous studies showing how accounting plays a crucial role in bringing about shifts between different economic frames (e.g. McLaren and Appleyard, 2020; Skærbæk and Tryggestad, 2010; Vinnari and Skærbæk, 2014). We add to these studies, which have emphasised the slow and arduous processes involved in making accounting performative, by explicating and conceptualising how the introduction of new accounting devices can relatively quickly create pivot points in ongoing change processes.

How did the EVA calculation bring about this sudden shift in the economic frame of the mid-1990s? Previous studies have proposed that the performative power of accounting depends on its capacity to transform ideas and entities into calculable objects (e.g. Pucci and Skærbæk, 2020; Vesty et al., 2015; Warren and Seal, 2018), making the “economic” visible (e.g. Lassila et al., 2019) and providing a yardstick for adjudicating between success and failure (e.g. Georg and Justesen, 2017; Kornberger and Carter, 2010). Our analysis shows how the power of accounting to precipitate a shift in the economic frame depends on a combination of these things. The introduction of EVA occurred when there was an ongoing discourse about a need for management to adopt a more “shareholder value-orientated” financial strategy. This new accounting device connected with and amplified this discourse, creating felicitous conditions for change (Callon, 2007). Callon (1998a) has suggested that accounting can play a significant role in framing the “economic” because it allows framing to become “more refined, richer, delving into the complexity of relationships and in so doing it authorises decisions which are more and more calculated or (to use the commonly-accepted word) more and more rational” (ibid., p. 24). This was evident here. The new accounting devices made it possible to precisely calculate the cost of ManuCo's high equity ratio and the resultant loss in shareholder value. Consequently, vague appeals for management to “do more” with the company's financial strength became increasingly concrete and “more rational” (Callon, 1998a, p. 24).

The EVA calculation – as publicly presented in the Stern-Stewart ranking list and taken up in capital market actors' commentaries – also enabled a new disciplinary force to be exerted upon the company's management. Accounting scholars have long recognised how accounting can have disciplinary effects by rendering entities and actors visible and comparable (e.g. Miller, 2001). The creation of categories, such as normal/abnormal or, in this case, value-creating/value-destroying, can make those subjected to these comparisons internalise the norms by which comparisons are made (Foucault, 1977). This is especially true in a market context in which a company's performance is continuously evaluated and judged by distant others (Callon, 1998a; Roberts et al., 2006). We argue that this combination of ongoing shareholder value discourse in the capital market, coupled with a form of accounting conferring calculability, rationality and disciplinary effects, created a performative moment bringing about a sudden shift in the framing of ManuCo's balance sheet in the mid-1990s.

The second contribution of our study involves an elaboration of how accounting can have long-term performative effects. In addition to precipitating the shift to a shareholder value frame, our findings show how accounting subsequently acted to stabilise and refine this new frame. We have referred to this process as performative momentum to highlight how accounting created “lock-in” effects and “path-dependencies” (Callon, 2007, p. 335), entrenching a particular economic rationality. The role of accounting in sustaining momentum for the shareholder value frame differed from that in terms of bringing about a shift in frames. Whereas much of the power of accounting in the mid-1990s derived from its ability to create new visibilities, the power of accounting in the subsequent framing process lay in its ability to reinforce and explicate a particular version of shareholder value creation. We have shown how a cost of capital logic formatted and animated a new series of calculations about the structure of ManuCo's balance sheet, beginning with management's introduction of a capital structure target in 2000. The recursive and cumulative process in subsequent years, entrenching an ever-more narrowly defined version of the shareholder value frame, pushed the cost of capital discourse to its logical conclusion – in order to create shareholder value management needed to “maximise” the company's financial gearing and distribute “excess” cash to shareholders. As a result, between 1998 and 2007, ManuCo's equity ratio was reduced by a further 25% from 47% to 35% (Appendix).

This finding elaborates on previous studies that have focused on the precarious and contested nature of framing processes, emphasising how “overflowing perpetually occurs” and framing is “only provisionally stabilised” (Vinnari and Skærbæk, 2014, p. 491; Jollands and Quinn, 2017; Skærbæk and Tryggestad, 2010). Our study adds to this research by showing how accounting can enact more “durable irreversibilities” (Muniesa et al., 2007, p. 3) by framing and structuring “cold negotiations” (Callon, 1998b, p. 266) within an established frame. To be clear, we do not argue that there was consensus about ManuCo's financial strategy during this period. Rather, disagreements concerning the structure of ManuCo's balance sheet took place within the established shareholder value frame; there was no overt questioning of the goal to create shareholder value or the value of debt financing. Instead, the debate centred on precisely how much debt ManuCo should take on. This was in marked contrast to the early 1990s, when there was a “hot situation” (Callon, 1998b, p. 260) with open disagreement about the primary purpose of the company's financial strategy.

Yet, we do not claim that the shareholder value frame became so robust that it could not overflow. Indeed, we show how this frame did overflow in the wake of the financial crisis in 2008/2009 when ManuCo's high leverage threatened the company's survival. However, what is notable is that this overflow did not happen due to contestation between different frames (cf. Jollands and Quinn, 2017; Skærbæk and Tryggestad, 2010). Our analysis suggests the opposite: overflow happened because of the stability of the shareholder value frame and the shared vision (and actions) this created regarding the choice of an appropriate financial strategy for ManuCo. The shareholder value frame did not overflow because it had failed to perform (cf. Themsen and Skærbæk, 2018) but rather because it had been stabilised so successfully. Our analysis of the role of accounting in perpetuating the shareholder value frame shows how, as Callon (1998b) has posited, “the potential sources of overflow are to be found in precisely those elements that give it [the frame] its solidity, rather than in any areas left unmentioned” (p. 255). Because the shareholder value frame was so entrenched as a calculative rationality at the corporate-capital market interface, this created vulnerabilities in that the frame proved to be unsustainable in the face of a more volatile and changing business environment. This finding complements previous insights into how overflows emerge from contested, intersecting and partial frames (McLaren and Appleyard, 2020; Skærbæk and Tryggestad, 2010; Vinnari and Skærbæk, 2014).

6.2 Accounting and shareholder value

Our study also contributes to the interdisciplinary literature on shareholder value and the financialisation of listed companies. Our findings add to this literature by showing how accounting played a central role in precipitating the adoption of a shareholder value-oriented financial strategy and articulating the precise characteristics of such a strategy. Understanding these different roles of accounting helps us to better understand the emergence of shareholder value-oriented corporate strategies. First, our findings highlight how accounting played a role in operationalising the shareholder value theory and making this new conception of the “economic” both desirable and actionable. This complements previous studies, which have linked the momentum of the shareholder value movement to broader structural and cultural changes (e.g. Davis and Kim, 2015; van der Zwan, 2014; Zorn et al., 2005). The performativity approach adopted in this paper was useful in helping us to conceptualise economic theories as socio-technical assemblages (Callon, 1998a) and to explore when and how the pursuit of shareholder value creation was inscribed in accounting devices, like the EVA calculations and the ManuCo capital structure target, which then circulated among capital market actors and corporate managers. This shows the importance of recognising the role of accounting not only in implementing financialised strategies (e.g. Cushen, 2013; Ezzamel et al., 2008) but also in formulating such strategies at the company-capital market interface.

Second, our study highlights the gradual and contingent nature of adopting shareholder value-oriented behaviour. Whereas previous sociological studies have tended to conceptualise shareholder value as a radical shift from one economic frame to another (e.g. Lazonick and O'Sullivan, 2000), our longitudinal analysis of ManuCo's evolving financial strategy underscores how the framing process played out over a long period. There was a process of accreting a shareholder value discourse in the early 1990s, leading to a rapid shift in this economic frame in response to the introduction of accounting devices reimagining the value of ManuCo's balance sheet. However, the framing process continued after this frameshift, wherein a shareholder value-creating capital structure became enacted in ever-more exacting ways. The evolving qualities of the constitution of a “valuable” financial strategy unpack the more monolithic characterisation of the shareholder value movement, highlighting the processes of entrenchment that led to an ever-more narrow definition of the “economic” in this case.

Third, our analysis of the role of accounting in making the shareholder value theory calculable and rational also helps us to understand ManuCo's dedication to shareholder value creation, even in the absence of problems that previous studies have suggested are associated with the adoption of such financial strategies (e.g. Gleadle et al., 2014; Williams, 2000). ManuCo had a strong operating performance throughout the studied period and was lauded for this in the capital market. The company was not under threat of a hostile takeover or subject to any observable shareholder activism. What stood out in our study was management's commitment to being recognised as a “good” company by acting in an economically rational manner. The disciplining rationality created by the distributed operation of specific accounting devices in the capital market and among corporate managers thus appears to have informed the company's transformation from a shareholder value sceptic to an ardent supporter of shareholder value creation.

6.3 Implications, limitations and future research

Our findings have several important implications for research and practice. Theoretically, the concepts of performative moment and performative momentum help us to distinguish between different performative temporalities of accounting: the former relates to shifts between different economic frames and the latter relates to the stabilisation of an economic frame over time. Researchers need to be attentive to these different performative temporalities, as both can significantly impact economic action. In particular, performative momentum can be easily overlooked since “cold negotiations” (Callon, 1998b, p. 266) unfold gradually and in less dramatic ways. Yet, such processes can clearly have substantive effects. For example, while ManuCo's equity ratio dropped dramatically between 1996 and 1997, this was followed by a further sizable decrease between 1998 and 2007 as a result of the continued pursuit of shareholder value. Further, our study also highlights how such frame stability can be a source of overflows. In our case, we saw how the performative momentum created by various accounting devices over time enacted a radical new definition of the shareholder value frame – to “maximise” ManuCo's financial gearing. This narrow framing of a valuable financial strategy eventually threatened the company's survival. A key theoretical implication of our study is that performativity researchers need to recognise and heed both performative temporalities to understand how accounting is implicated in framing processes and their effects.

Methodologically, our study underscores the relevance of studying the performativity of accounting through longitudinal case studies (see also Faulconbridge and Muzio, 2021; Themsen and Skærbæk, 2018) since this approach makes it possible to capture both “hot” and “cold” situations (Callon, 1998b). One way to study longitudinal change processes is using archival material, as we have done in this paper. The advantage of such a method is that it makes it possible to trace the shifting dynamics of performativity processes over more extended periods. Still, this method is not without limitations. The use of archival material means that insights from documents outside the public sphere are absent. This inevitably makes the account of actors' intentions and actions sparser in detail and influenced by actors' presentations of the self. While our chosen theoretical approach makes such positioning part of the empirical material to be analysed, future studies might also consider the use of retrospective interviews (though these will likely need to cover periods shorter than 20 years), notwithstanding the risk of ex-post rationalisations.

Practically, our study adds to an understanding of the spread of shareholder value theory and its influence on the behaviour of listed companies. Correspondingly, our findings also have potentially broader implications for understanding the transformative capacity of capital markets. This issue is of salience in the contemporary pursuit of sustainability, which includes efforts to integrate environmental, social and governance (ESG) factors into professional investment analysis and decision-making processes (e.g. Clune and O'Dwyer, 2020). The present study sketches out further details on how such a process of change in capital market and corporate behaviour might be realised. The need for accounting to offer different representations and imaginaries of organisational performance has long been recognised (e.g. Gray et al., 1995; Atkins et al., 2015). However, our study suggests that the discourse of “sustainability” – like that of “shareholder value” – must be operationalised through accounting calculations that directly enter established discursive and calculative arrangements at the company-capital market interface. Furthermore, our study highlights that analysts and other public commentators have an important role to play by using specific accounting calculations in their valuation models and interactions to visibly animate and create momentum behind specific forms of “sustainability creating” corporate strategies. While the field of ESG analysis has evolved into an increasingly sophisticated form of representing and analysing organisations' performance and position, replete with tailored accounting tools and techniques, the degree to which these have changed the economic reality for actors at the company-capital market interface appears limited (e.g. Solomon et al., 2013; Young-Ferris and Roberts, 2021). Yet, given that capital markets exert such influence on corporations, there are compelling reasons to seek to make capital market actors harness the power of accounting to create calculable, visible and disciplining yardsticks of “success” and “failure” that broadly advance sustainable business practices as viable and valuable for individual companies to pursue.

ManuCo's reported financial performance and metrics 1990–2021

YearInvoiced salesReturn on capital employed*Dividend pay-out ratio (% of profit)Equity ratio
Indexed to 1990% change from preceding year

Note(s): *Rounded to the nearest integer



In the aftermath of the financial crisis, the equity ratio fell another few points to 33% in 2009 (Appendix), but this was not a consequence of the management's purposeful actions to decrease the relative size of equity.


In 1990, the company was organised in seven business areas, ranging from heavy processing industry to manufacturing tools, with operations in more than 100 countries.


Between 1990 and 2010, ManuCo had only three CEOs and two Chairmen of the Board (one of whom was a former CEO). In 2010, ManuCo both the CEO and Chairman of the Board exited the company.


Table A1


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The authors gratefully acknowledge the constructive comments given by three anonymous reviewers and editor Lee Parker, as well as participants at APIRA (2016, Melbourne), the Stockholm School of Economics/Turku School of Economics workshop (2016, Sigtuna) and the MUSICA research seminar series at Stockholm Business School. Carl Henning Christner received funding from Vinnova (grant nr. 2009-04027) and Jan Wallander and Tom Hedelius Stiftelse (grant nr. W15-0472).

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Carl Henning Christner can be contacted at:

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