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High Finance/Low Strategy: Corporate Collapse in the Canadian Pulp and Paper Industry, 1919–1932

Published online by Cambridge University Press:  13 December 2011

Barry E.C. Boothman
Barry E.C. Boothman
Affiliation:
BARRY E. C.BOOTHMAN is associate professor of strategic management in the Faculty of Administration atthe University of New Brunswick.
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Abstract

The development of the pulp and paper sector has been a highly controversial subject in Canadian business history. During the 1920s, there was a rapid growth of capacity (which reached twice the level of market demand) and a series of mergers as different firms sought to attain giant size. By 1928 several leading companies were experiencing difficulties, and by 1932 half of the producers were bankrupt while the remainder hovered on the brink of insolvency. These developments had their own logic and were driven by strategic issues and the formation of an institutional market for industrial securities. As corporate executives propelled their firms into dubious strategies characterized by excess production and unrealistic dividend policies, the status of the newsprint producers was obscured from investors by financial and accounting practices, thereby contributing to a flood of investment, which was followed by corporate collapse. The attempts to reorganize the companies began a complex process that lasted anywhere from several years to more than a decade.

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Articles
Information
Business History Review , Volume 74 , Issue 4 , Winter 2000 , pp. 611 - 656
Copyright
Copyright © The President and Fellows of Harvard College 2000

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