The Extra-Legal Governance Structure of a Shadow Financial System: An Investigation of Organizations, Networks, and Institutions in the Absence of Formal Regulation This research project consists of a multi-stage, multi-method investigation into how governance is being constructed by organizations in the U.S. shadow financial system in the absence of formal state regulation. Specifically, the U.S. hedge fund market is a sociologically important research site because if offers qualities of a pseudo-natural experiment wherein the formal regulatory structures that operate in the traditional financial system have been removed, leaving organizations the opportunity to create their own extra-legal governance mechanisms and structures. The creation and reproduction of new forms of governance are empirically explored through 3 years of fieldwork, semi-structured interviews with expert informants, and social network analysis. The analysis has revealed a complex set of governance mechanisms that form the social cogs and wheels that bring into existence a unique form of market governance. The governance mechanisms operate within the inter and intra organizational dimensions. In addition to these governance mechanisms, the data shows that even though the hedge fund is one of the least regulated organizations in the U.S. financial system, formal law indirectly affects the hedge fund's governance practices. In the final section, a new conceptual model is developed that attempts to explain how the identified governance mechanisms converge to form three "ideal types" of governance regimes: (1) entrepreneurial regime; (2) transition regime; and (3) bureaucratic regime.
The goal for this year is to complete the remaining chapters of the dissertation and publish at least one journal article. Additionally, I look forward to taking a social network course and advance qualitative methods course.
