We report empirical evidence in line with the disciplining role of different institutional and other owner types in reducing managerial myopia. Using data from a large Nordic survey, we find that companies, to a reasonably high degree, feel that external pressure for a good result in the short-term generates conflict with the company’s long-term goals. We test for the effect of different ownership types and find that especially in firms with a large and non-transitory activist or fund as an owner, the perceived pressure for shortterm actions is reduced. In addition, we observe a negative association between firmprofitability and short-term pressure, and we find that younger managers feel significantly more pressure. Firms subject to greater pressure engage in more actions to accommodate that pressure. Again, the impact of a large activist owner is especially beneficial because such firms significantly less often undertake actions that have the potential to destroy value, such as deprioritizing their long-term investments or R&D.
|Peer-reviewed scientific journal||Journal of International Financial Management & Accounting|
|Publication status||Published - 02.09.2015|
|MoE publication type||A1 Journal article - refereed|
- 512 Business and Management
- Owner types
Brunzell, T., Liljeblom, E., & Vaihekoski, M. (2015). Short-term expectation in listed firms: The effects of different owner types. Journal of International Financial Management & Accounting, 26(3), 223-256. https://doi.org/10.1111/jifm.12028