The social construction of causality: The effects of institutional myths on financial regulation

Abstract

In this article, we consider the evolution of the US stock market from the 1770s through the early 20th century. Adopting an institutional lens, we conceive of the stock market as an institutional field constituted by socially constructed cultural logics and myths. We focus on the role of the US government as an actor embedded in the stock market field and sharing in the prevailing field logics. Tracking the dominant logics of the stock market field at different historical periods, we examine how these logics impacted government regulatory action upon the stock market, and how those government regulations affected the subsequent logics of the stock market field. Our research included both quantitative content analysis of articles in historical newspapers and qualitative historical analysis of multiple primary and secondary accounts of stock market problems and solutions across more than 150 years. We document how government regulatory action both reflects and shapes the logics of the stock market field.

Citation

Rubtsova, A., DeJordy, R., Glynn, M.A. and Zald, M. (2010), "The social construction of causality: The effects of institutional myths on financial regulation", Lounsbury, M. and Hirsch, P.M. (Ed.) Markets on Trial: The Economic Sociology of the U.S. Financial Crisis: Part B (Research in the Sociology of Organizations, Vol. 30 Part B), Emerald Group Publishing Limited, Leeds, pp. 201-244. https://doi.org/10.1108/S0733-558X(2010)000030B011