The Discursive Management of Financial Risk Scandals: The Case of Wall Street Journal Commentaries on LTCM and Enron

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Abstract

Scholars of financial risk culture have repeatedly identified its reliance upon popular confidence in the possibility and value of "risk-management." The past two decades, however, have seen repeated outbreaks of scandalous financial failures involving some of the most idealized risk-management experts. Examining Wall Street Journal commentaries published in the aftermath of the "Long-Term Capital Management" and "Enron" debacles, the paper uncovers the discursive strategies involved in making sense of these financial scandals. It calls attention to the considerable retrospective interpretive space that the risk discourse enjoys, illustrating the degree to which it relies upon after-the-fact reconstructions of "risk" and "risk-taking." Despite probabilistic rhetoric, commentaries moralize bad outcomes by working backwards in time, retrospectively linking the outcomes to narratives of earlier and irresponsible transgressions of supposedly obvious risk calculi. The paper discusses the implications of its findings for a variety of theoretical accounts of contemporary financial risk culture.

Original languageEnglish
Pages (from-to)251-270
Number of pages20
JournalQualitative Sociology
Volume35
Issue number3
DOIs
StatePublished - Sep 2012

Bibliographical note

Funding Information:
Acknowledgments I thank the anonymous reviewers of this paper and Qualitative Sociology’s Editor-in-Chief, David Smilde, for their important suggestions and contributions. I also thank Nadav Gabay and Gideon Kunda for their helpful comments. This research was supported by The Israel Science Foundation (grant No. 568/08).

Funding

Acknowledgments I thank the anonymous reviewers of this paper and Qualitative Sociology’s Editor-in-Chief, David Smilde, for their important suggestions and contributions. I also thank Nadav Gabay and Gideon Kunda for their helpful comments. This research was supported by The Israel Science Foundation (grant No. 568/08).

FundersFunder number
Israel Science Foundation568/08

    Keywords

    • Enron
    • Financial culture
    • LTCM
    • Media discourse
    • Risk-management

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