The big end of town meets the local council: the investment habitus of four sets of Australian councils during the GFC

Jones, Greg and Beattie, Claire and Bowrey, Graham and Smark, Ciorstan (2016) The big end of town meets the local council: the investment habitus of four sets of Australian councils during the GFC. Australian Journal of Public Administration, 75 (4). pp. 441-456. ISSN 0313-6647

Abstract

The Global Financial Crisis of 2008 led to a substantial write-down in the value of investments such as collateralised debt obligations (CDOs) with one class of investors being NSW Local councils. This article analyses interviews with four different investor types (or sets) of
local councils, each of which took a substantially different approach to CDO investment. This categorisation into sets was based on interviews of 28 individuals working within 14 local councils as well as commentaries on legal cases involving a class action of local councils suing Lehman Brothers Australia as well as Grange Securities over losses in their investments. This article adopts Bourdieu’s Theory of Practice to describe and explain behaviour regarding decisions to invest (or not) in CDOs. Interesting themes arise regarding differing views on the appropriate role of local councils, and on the degree and form of
‘capital’ (which includes knowledge, competencies, skills, and economic resources) that a council should have before investing in sophisticated financial products. This article
explores the role that field, habitus, and capital played in moderating and influencing council investment making decisions. The analysis shows that these Bourdieuian concepts can be utilised to help explain individual behaviour. This case study shows that excessive capital left in the hands of individuals may result in suboptimal decision making. Local councils may need to consider ways of implementing policies and procedures that can be used to moderate individual action.


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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: Permanent restricted access to Published version due to publisher copyright policy.
Faculty / Department / School: Current - Faculty of Business, Education, Law and Arts - School of Commerce
Date Deposited: 22 Mar 2017 23:30
Last Modified: 05 Feb 2018 03:13
Uncontrolled Keywords: Bourdieu; decision making; habitus; investment policy; local government investment
Fields of Research : 15 Commerce, Management, Tourism and Services > 1502 Banking, Finance and Investment > 150205 Investment and Risk Management
15 Commerce, Management, Tourism and Services > 1503 Business and Management > 150303 Corporate Governance and Stakeholder Engagement
15 Commerce, Management, Tourism and Services > 1501 Accounting, Auditing and Accountability > 150102 Auditing and Accountability
Socio-Economic Objective: E Expanding Knowledge > 97 Expanding Knowledge > 970115 Expanding Knowledge in Commerce, Management, Tourism and Services
Identification Number or DOI: 10.1111/1467-8500.12212
URI: http://eprints.usq.edu.au/id/eprint/30616

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