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Does shareholder myopia lead to managerial myopia? A first look

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  • Cherian Samuel

Abstract

Shareholder myopia may not necessarily lead to managerial myopia. To the extent that managerial myopia is a problem for some firms, the reasons for this must be sought elsewhere. While institutional ownership has a positive effect on capital expenditures, it appears to have a negative effect on R&D expenditures and no effect on advertising expenditures. The results in this paper also call into question the viewpoint that faults the short-term orientation of financial markets as contributing to long-term competitiveness problems of economies.

Suggested Citation

  • Cherian Samuel, 2000. "Does shareholder myopia lead to managerial myopia? A first look," Applied Financial Economics, Taylor & Francis Journals, vol. 10(5), pages 493-505.
    • Handle: RePEc:taf:apfiec:v:10:y:2000:i:5:p:493-505
    DOI: 10.1080/096031000416370
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    References listed on IDEAS

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    1. Kenneth A. Froot & Andre F. Perold & Jeremy C. Stein, 1992. "Shareholder Trading Practices And Corporate Investment Horizons," Journal of Applied Corporate Finance, Morgan Stanley, vol. 5(2), pages 42-58, June.
    2. Samuel, Cherian, 1996. "Stock market and investment : the governance role of the market," Policy Research Working Paper Series 1578, The World Bank.
    3. Samuel, Cherian, 1996. "The stockmarket as a source of finance : a comparison of U.S. and Indian firms," Policy Research Working Paper Series 1592, The World Bank.
    4. Samuel, Cherian, 1996. "Internal finance and investment : another look," Policy Research Working Paper Series 1663, The World Bank.
    5. Michael E. Porter, 1992. "Capital Choices: Changing The Way America Invests In Industry," Journal of Applied Corporate Finance, Morgan Stanley, vol. 5(2), pages 4-16, June.
    6. Sheard, P., 1992. "Long-Term Horizons and the Japanese Firm," ISER Discussion Paper 0283, Institute of Social and Economic Research, Osaka University.
    7. Bronwyn H. Hall, 1991. "Corporate Restructuring and Investment Horizons," NBER Working Papers 3794, National Bureau of Economic Research, Inc.
    8. Samuel, Cherian, 1996. "Stock market and investment : the signaling role of the market," Policy Research Working Paper Series 1612, The World Bank.
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    Cited by:

    1. Shin, Jongtae & Shin, Hyun, 2013. "Institutional ownership and technological relatedness: A test of endogeneity," Journal of Business Research, Elsevier, vol. 66(11), pages 2279-2286.
    2. Robert Rieg, 2015. "Dynamics of value-based management: does shareholder value cause short-termism?," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 26(2), pages 193-224, August.
    3. Diogo Correia & Ricardo Barradas, 2021. "Financialisation and the slowdown of labour productivity in Portugal: A Post-Keynesian approach," PSL Quarterly Review, Economia civile, vol. 74(299), pages 325-346.
    4. Ricardo Barradas & Rishi Lakhani, 2024. "The finance–inequality nexus in the era of financialisation: Evidence for Portugal," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(3), pages 3510-3544, July.
    5. Jeremy Galbreath, 2017. "The Impact of Board Structure on Corporate Social Responsibility: A Temporal View," Business Strategy and the Environment, Wiley Blackwell, vol. 26(3), pages 358-370, March.
    6. David Marginson & Laurie McAulay & Melvin Roush & Tony Van Zijl, 2010. "Performance measures and short‐termism: An exploratory study," Accounting and Business Research, Taylor & Francis Journals, vol. 40(4), pages 353-370.
    7. Ricardo Barradas, 2023. "Why Has Labor Productivity Slowed Down in the Era of Financialization?: Insights from the Post-Keynesians for the European Union Countries," Review of Radical Political Economics, Union for Radical Political Economics, vol. 55(3), pages 390-422, September.
    8. Kosheek Sewchurran & Johan Dekker & Jennifer McDonogh, 2019. "Experiences of Embedding Long-Term Thinking in an Environment of Short-Termism and Sub-par Business Performance: Investing in Intangibles for Sustainable Growth," Journal of Business Ethics, Springer, vol. 157(4), pages 997-1041, July.
    9. Czakon, Wojciech & Klimas, Patrycja & Kawa, Arkadiusz & Kraus, Sascha, 2023. "How myopic are managers? Development and validation of a multidimensional strategic myopia scale," Journal of Business Research, Elsevier, vol. 157(C).
    10. Ryan Krause & Michael C. Withers, 2022. "Propulsions Toward What Capes? Testing Normative Theory Through a Panorama of Consequences," Journal of Business Ethics, Springer, vol. 181(2), pages 317-333, November.

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