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  • 2020
  • Working Paper
  • HBS Working Paper Series

Short-Termism, Shareholder Payouts, and Investment in the EU

By: Jesse M. Fried and Charles C.Y. Wang
  • Format:Print
  • | Language:English
  • | Pages:33
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Abstract

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.

Keywords

Short-termism; Quarterly Capitalism; EU; Dividends; Equity Issuances; Equity Compensastion; Capital Flows; Capital Distribution; R&D; Innovation; Investment; Corporate Governance; Investment Return; Acquisition; European Union

Citation

Fried, Jesse M., and Charles C.Y. Wang. "Short-Termism, Shareholder Payouts, and Investment in the EU." Harvard Business School Working Paper, No. 21-054, October 2020.
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About The Author

Charles C.Y. Wang

Accounting and Management
→More Publications

More from the Authors

    • August 10, 2022
    • Wall Street Journal

    The Virtues of Stock Buybacks

    By: Jesse M. Fried and Charles C.Y. Wang
    • Journal of Financial Economics

    How Much Should We Trust Staggered Difference-In-Differences Estimates?

    By: Andrew C. Baker, David F. Larcker and Charles C.Y. Wang
    • March 2022
    • Faculty Research

    Corporate Governance in Business Analysis and Valuation

    By: Charles C.Y. Wang
More from the Authors
  • The Virtues of Stock Buybacks By: Jesse M. Fried and Charles C.Y. Wang
  • How Much Should We Trust Staggered Difference-In-Differences Estimates? By: Andrew C. Baker, David F. Larcker and Charles C.Y. Wang
  • Corporate Governance in Business Analysis and Valuation By: Charles C.Y. Wang
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