Financialization and corporate profit in Mexico

Abstract

This article analyzes the behavior of the treasuries of several of the largest private capital business groups of Mexico to show that way in which they manage their cash flows in order to increase profitability. An objective of this article is to highlight how these companies pursue short term results, more in line with the demand for increasing rent seeking opportunities than with increasing productive capacity and the generation of stable and long term earnings. Four large companies have been chooses, each owned by national investors with diverse associations with foreign capital. Through the examination of their accounting and financial books, the magnitude of their financial earnings in relation to there productive ones are illustrated. These companies have operated within strategic and dynamic sectors of the Mexican economy during the past thirty years. These companies’ profitability tends to depend more on financial activity than productive activity. In moments of financialization, important sectors of large companies that operate in Mexico maintain conditions of profitability, even despite diminished productive capacity.