Short-termism, investor clientele, and corporate performance
By: Francois Brochet, Maria Loumioti, George Serafeim
Contributors: Loumioti, Maria, author; Serafeim, George, author; Harvard Business School
Edition: Revised edition
Series: Working paper / Harvard Business School -- 12-072; Working paper (Harvard Business School) -- 12-072
Publisher: Harvard Business School
Published: 2014
Place of publication: Boston
Language: eng
Number of pages: 53
Work titles: Short-termism, investor clientele, and firm risk
Description: Using conference call transcripts to measure the time horizon that senior executives emphasize when they communicate with investors, we develop a measure of corporate short-termism. We find that the measure of short-termism is associated with various proxies for earnings management, suggesting that our proxy partially captures opportunistic behavior. We also show that firms focusing more on the short-term have a more short-term oriented investor base, and fewer analysts issuing long-term forecasts, suggesting that corporate and capital market short-termism are related. Moreover, consistent with analytical models that emphasize the costly nature of short-termism, we find that short-term oriented firms exhibit lower future accounting and stock market performance and a higher implied cost of capital.
Notes: "February 2012. (Revised August 2012, February 2014.)" -- Publisher's website.

Revision of Short-termism, investor clientele, and firm risk.

Includes bibliographical references (pages 33-36).