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  • June 2021
  • Article
  • European Financial Management

Short-Termism, Shareholder Payouts, and Investment in the EU

By: Jesse M. Fried and Charles C.Y. Wang
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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—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, over the last 30 years and the last decade, net shareholder payouts have been moderate, and investment and 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; EU; Payout Policy; 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." European Financial Management 27, no. 3 (June 2021): 389–413.
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About The Author

Charles C.Y. Wang

Accounting and Management
→More Publications

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More from the Authors
  • Dan McCrum - Unmasking Wirecard By: Jonas Heese, Charles C.Y. Wang, Tonia Labruyere and Carlota Moniz
  • Identifying Quality Stocks using Quantitative Screens By: Charles CY Wang and Johnson Elugbadebo
  • The Virtues of Stock Buybacks By: Jesse M. Fried and Charles C.Y. Wang
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