The Role of Institutional Investors in Curbing Corporate Short-Termism

Posted: 24 Apr 2016

See all articles by Robert Pozen

Robert Pozen

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Date Written: October 1, 2015

Abstract

Institutional investors are the majority owners of most publicly traded companies but allow activist hedge funds with smaller positions to push through corporate changes. The author offers various reasons why institutional investors may be reluctant to actively participate in proxy fights but then suggests several practical forms of investor engagement that support long-term value creation. So, in future campaigns by hedge funds, institutional investors should actively participate to ensure that the outcome promotes long-term growth instead of temporary price spurts.

Suggested Citation

Pozen, Robert, The Role of Institutional Investors in Curbing Corporate Short-Termism (October 1, 2015). Financial Analysts Journal, Vol. 71, No. 5, 2015, Available at SSRN: https://ssrn.com/abstract=2767578

Robert Pozen (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

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United States

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