Corporate Ownership and Managerial Short-Termism: Results from a Finnish Study of Management Perceptions
International Journal of Production Economics, Vol. 117, No. 2, 2009
Posted: 20 Feb 2009
Date Written: February, 20 2009
Abstract
Increased media exposure to layoffs and corporate quarterly financial reporting have created arguable a common perception-especially favored by the media itself-that the companies have been forced to improve their financial performance from quarter to quarter. Academically, the relevant question is whether companies themselves feel that they are exposed to short-term pressure to perform even if it means that they have to compromise company's long-term future. This paper studies this issue using results from a survey conducted among the 500 largest companies in Finland. The results indicate that companies in general feel moderate short-term pressure, with reasonable dispersion across firms. There seems to be a link between the degree of pressure felt, and the firm's ownership structure, i.e. we find some support for the existence of potentially short-term versus long-term owners. We also find significant ownership related differences, in line with expectations, in how such short-term pressure is reflected in actual decision variables such as the investment criteria used.
Keywords: Impatience, Short-termism, Investments, Ownership, Finland
JEL Classification: G31, G34, L21, M51, M52
Suggested Citation: Suggested Citation