Short‐termism, shareholder payouts and investment in the EU

Investor‐driven 'short‐termism' is said to harm EU public firms' ability to invest for the long term, prompting calls for the EU to better insulate managers from shareholder pressure. But the evidence offered—rising levels of repurchases and dividends—is incomplete and misleading: it...

Full description

Saved in:
Bibliographic Details
Published in:European financial management : the journal of the European Financial Management Association 2021-06, Vol.27 (3), p.389-413
Main Authors: Fried, Jesse M., Wang, Charles C. Y.
Format: Article
Language:English
Subjects:
Corporate governance
innovation
investment
payout policy
short‐termism
Stockholders
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Investor‐driven 'short‐termism' is said to harm EU public firms' ability to invest for the long term, prompting calls for the EU to better insulate managers from shareholder pressure. But the evidence offered—rising levels of repurchases and dividends—is incomplete and misleading: it ignores large offsetting equity issuances that move capital from investors to EU firms. We show that, over the last 30 years and the last decade, net shareholder payouts have been moderate and investment and cash balances have increased. In sum, the data provide little basis for the view that short‐termism in the EU warrants corporate governance reforms.
ISSN:1354-7798
1468-036X
DOI:10.1111/eufm.12305