Are you as tired of the short-termism debate as I am? But the beat goes on and there is an interesting new paper from Harvard law professor Jesse Fried and Harvard business professor Charles Wang on short-termism 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---in the form of rising levels of repurchases and dividends---is incomplete and misleading, as it ignores large offsetting equity issuances that move capital from investors to EU firms. We show that net shareholder payouts have been moderate, that both investment levels and investment intensity have been rising, and that cash balances have increased. In sum, the data provide little basis for the view that short-termism in the EU warrants corporate governance reforms.
Fried, Jesse M. and Wang, Charles C. Y., Short-Termism, Shareholder Payouts, and Investment in the EU (October 9, 2020). European Corporate Governance Institute - Law Working Paper 544/2020, Available at SSRN: https://ssrn.com/abstract=3706499 or http://dx.doi.org/10.2139/ssrn.3706499
As typical of Jesse's work, it's very well done and deserves close attention.
