Short-term Expectations in Listed Firms:: The Effects of Different Owner Types
2012 (English)Conference paper, Abstract (Refereed)
We report empirical evidence regarding the disciplining role of differentinstitutional and other owners in reducing managerial myopia. Using data from alarge Nordic survey, we find that companies to a reasonably high degree feelthat external pressure for a good result in the short-term generates conflictwith the company’s long-term goals. We test for the effect of several ownershiptypes, and find that especially in firms with a large private equity owner theperceived pressure for short-term actions is reduced. In addition, we find anegative association between firm profitability and short-term pressure. Wealso find support for a behavioral characteristic: younger managers feelsignificantly more pressure. Firms subject to higher pressure undertake moreactions to accommodate that pressure. Again, the impact of especially a largeprivate equity owner is beneficial because such firms undertake significantlyless often actions that are likely to destroy value, such as deprioritizingtheir long-term investments or R&D.
Place, publisher, year, edition, pages
IdentifiersURN: urn:nbn:se:su:diva-90881OAI: oai:DiVA.org:su-90881DiVA: diva2:627941
Summer Workshop on Corporate Governance, CBS, August 2012 in Copenhagen