Proposals to favor long-term shareholders of public firms are based on a widely-held belief: that long-term shareholders, unlike short-term shareholders, benefit from managers maximizing the long-term economic value generated by...
We show that supply side effects arising from the bond holdings of open-end mutual funds affect corporate credit risk. In our model, funds exposed to flow-performance relationships are reluctant to refinance bonds of companies with...
We show that following shocks that change an industry’s competitive environment, firms with more shortterm institutional investors experience smaller drops in sales and investment and have better long-term performance than...
This paper develops a dynamic contracting (multi-tasking) model of a levered firm. In particular, the manager selects long-term and short-term efforts and shareholders choose optimal debt and default policies. Excessive...
A long-held view in corporate circles has been that furious rapid trading in stock markets has been increasing in recent decades, justifying corporate governance and corporate law measures, such as development and application of...
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...
In this paper, we first shed light on the factors that underlie the differences between the ?shareholder wealth maximization? and the ?long-term commitment? models of corporate governance. By introducing a third type of governance...
The big corporate governance debates nowadays concern the corporation’s time horizons, and the balance of power between shareholders and managers. In response to actual and anticipated pressure from shareholder activists –...
We model blockholder governance as a sequential process, from less hostile private intervention, to confrontational public intervention, and finally exit. When the blockholder faces short-term incentives, the threat of public...
We present a model where firms compete for scarce managerial talent ("alpha") and managers are risk-averse. When managers cannot move across firms after being hired, employers learn about their talent, allocate them efficiently to...
Stock-market–driven short-termism is crippling the American economy, according to legal, judicial, and media analyses. Firms forgo the R&D they need, cut capital spending, and buy back their own stock so feverishly that they...
