A model of capital market pressure

Abstract: This study investigates the nature of capital market pressure as a tool for corporate control by performing nine interviews with senior management and board members from nine Swedish corporations listed on Nasdaq OMX Stockholm Large Cap and Mid Cap. The analysis presents significant support for previous research but also extends the existing theoretical framework. A model of capital market pressure is developed which contributes with a systematized way of analyzing capital market pressure. The model distinguishes between formal and informal pressure. Formal pressure is exercised by shareholders through voting and informal pressure is perceived implicitly through actions by the owners, financial reports, analysts, stock price and media. Additionally, the model highlights the interrelationships between these channels and the controllability of such pressure.