University of Tennessee, Knoxville TRACE: Tennessee Research and Creative Exchange Doctoral Dissertations Graduate School 5-2012 Seeing the Forest for the Trees: Finance and Managerial Control in the US Forest Products Industry, 1945-2008 Andrew Augustus Gunnoe [email protected] Follow this and additional works at: https://trace.tennessee.edu/utk_graddiss Part of the Political Economy Commons Recommended Citation Gunnoe, Andrew Augustus, "Seeing the Forest for the Trees: Finance and Managerial Control in the US Forest Products Industry, 1945-2008. " PhD diss., University of Tennessee, 2012. https://trace.tennessee.edu/utk_graddiss/1299 This Dissertation is brought to you for free and open access by the Graduate School at TRACE: Tennessee Research and Creative Exchange. It has been accepted for inclusion in Doctoral Dissertations by an authorized administrator of TRACE: Tennessee Research and Creative Exchange. For more information, please contact [email protected]. To the Graduate Council: I am submitting herewith a dissertation written by Andrew Augustus Gunnoe entitled "Seeing the Forest for the Trees: Finance and Managerial Control in the US Forest Products Industry, 1945-2008." I have examined the final electronic copy of this dissertation for form and content and recommend that it be accepted in partial fulfillment of the equirr ements for the degree of Doctor of Philosophy, with a major in Sociology. Paul K. Gellert, Major Professor We have read this dissertation and recommend its acceptance: Jon Shefner, Sherry Cable, Donald D. Hodges Accepted for the Council: Carolyn R. Hodges Vice Provost and Dean of the Graduate School (Original signatures are on file with official studentecor r ds.) Seeing the Forest for the Trees: Finance and Managerial Control in the US Forest Products Industry, 1945-2008 A Dissertation Presented for the Doctor of Philosophy Degree The University of Tennessee, Knoxville Andrew Augustus Gunnoe May 2012 DEDICATION This dissertation is dedicated to my family by blood, marriage, friendship, and spirit This one is for all of us ii ACKNOWLEDGEMENTS This dissertation was made possible by the support, encouragement, and love of many people. First, I would like to thank my dissertation committee. Sherry Cable was the first person to introduce me to the discipline of sociology and without her encouragement it is doubtful that I would have ever pursued this degree. Over the course of my graduate studies I ventured away from her field of expertise, but I am eternally grateful for all her unwavering support and encouragement. Don Hodges provided me with an invaluable perspective from the field of forestry. He deserves credit for his ongoing support and willingness to entertain perspectives that are foreign to his disciplinary background. Jon Shefner was helpful to me in countless ways over the course of my graduate studies. Although at times we have differences of opinion, his penetrating questions and no nonsense approach to social science will always remain a source of inspiration. Finally, Paul Gellert’s support, intellect, encouragement, patience, and humor were more invaluable than words can express. Paul never lost faith in me and always pushed me to articulate my questions and refine my arguments. I hope this dissertation adequately reflects the time and energy that he put into it. In addition to my committee I would also like to thank the entire Department of Sociology at the University of Tennessee. This department welcomed me from political science and gave me the freedom and institutional support to pursue questions in the dark, murky waters of political economy. I would especially like to thank Harry Dahms, who left a far greater impact on me than he probably realized. Learning social theory from Harry was one of the greatest intellectual experiences of my life and I will always be grateful for the splinter he lodged in my eye. I was also fortunate enough to enter the sociology graduate program with a cohort of brilliant graduate students that shared my interests in Marxian political economy. I would especially like to thank John Bradford, Ryan Wishart, and Shannon Williams. Together we waded through the complexities of Marxian value theory and political economy and without their support and insights I never could have advanced as far as I have. Shannon Williams in particular deserves as much credit as anyone for sharing and shaping the intellectual journey that led to this iii dissertation. Our long conversations – from the earliest days of graduate school to the present – have been critical to my intellectual development over the years. Shannon will always be a friend, colleague, and comrade. Several individuals outside of the sociology department also contributed to this project. Paul Paolucci at Eastern Kentucky University has been an enormous intellectual inspiration and friend. Paul’s mastery of Marxian dialectics has been a critical source of knowledge and insight for me and his influence can be seen throughout the pages of this dissertation. Jim Rinehart, of R&A investment forestry, was a valuable source of information and I want to thank him for his many replies to my questions about timberland investment and for sharing with me his timberland transaction database. Brad Smith from the US Forest Service answered many of my questions about timberland ownership and was extremely helpful in helping me locate data. I would also like to thank Cathy Jenkins who works in graphic design at the University of Tennessee for helping me put together the merger figure in Chapter six of this dissertation. On a more personal note, I would like to thank the community of friends that I shared my time with while in Knoxville, TN. In August of 2003, a month prior to my first semester of graduate school, I moved into an old log cabin in a community tucked away in the forests of South Knoxville known as Loghaven. Loghaven has been at the center of my universe for the past nine years and the countless friends that shared this time with me are more important to me than they could ever know. There are too many individuals to list, but they know who they are. It is an honor to call you my friends and I want to thank you for all the inspiration, love, and support that you have given me over the years. I want to thank my wonderful family. My brothers and sisters – Gary. Joanna, Meredith, and Justin – have provided support and friendship to me throughout my life. We have each gone our separate ways and pursued our own dreams, but our family bond has always kept us close and I love you all so much. I also want to thank the McCormick family for all your love and support over the years. My cousin Brian McCormick passed away four years ago to the day that I defended this dissertation and the feeling of his support and love the morning of my defense was overwhelming. I love you and miss you iv Brian! And finally, I want to thank my incredible parents, Gerald and Judith Gunnoe, who worked their entire lives so that I might have the chance to succeed. It was my father who told me as a distraught and confused young man that I should “question everything.” Although following his advice led me far away from where he might have thought it would, his support and encouragement have been unwavering. But it is my mother, more than anyone else, that is responsible for my success as a student. In grade school she read the books I was supposed to read and stayed up late with me helping me write the papers I was reluctant to write. For a teenager who had other things on his mind, she kept me focused and insisted that I work hard and study. For this, and a million other things, I owe my mother a debt of gratitude that can never be repaid. Thank you mom and dad, all of this was made possible because of you. Finally, I want to thank my sweet wife Stacy. Stacy walked into my life just over three years ago and her love and support have nourished me throughout this dissertation project. Thank you for believing in me and for showering me with love each and every day. It is you that gives me confidence and hope in this world that is so often filled with despair. The future always looks bright with you by my side. v ABSTRACT 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.