Publications
Publications
- 2020
- HBS Working Paper Series
Short-Termism, Shareholder Payouts, and Investment in the EU
By: Jesse M. Fried and Charles C.Y. Wang
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.