Advertisement

Introduction

  • Kim M. Willey
Chapter

Abstract

This chapter introduces the concept of stock market short-termism (SMST), specifically that financial intermediaries and investors are far too focused on short-term financial objectives, and corrective measures are urgently needed, and provides the rationale for producing this book. The rationale presented is that there have been considerable calls for regulatory and financial industry reform to address SMST, and there is a resulting need to analyze whether implemented reforms conceptually address such concerns. This chapter also considers the nature and geographical extent of the short-termism problem and the debate around whether a problem exists at all and provides a road map for the analysis provided in the book and sets out the research limitations.

References

  1. Atkins, Ralph and Williamson, Hugh. 2007. “Call to Resist Anglo-American Model of ‘Short-termism’.” 26 April. Financial Times.Google Scholar
  2. Barton, Dominic. 2011. “Capitalism for the Long Term.” March. Harvard Business Review. 84–90.Google Scholar
  3. Barton, Dominic and Wiseman, Mark. 2014. “Focusing Capital on the Long Term.” January–February. Harvard Business Review. 44–51.Google Scholar
  4. Baumeister Roy, F. and Bushman, Brad J. 2010. Social Psychology and Human Nature. 2nd ed. Wadworth.Google Scholar
  5. Bena, Jan, Ferreia, Miguel A., Matos, Pedro, and Pires, Pedro. 2017. “Are Foreign Investors Locusts? The Long-Term Effects of Foreign Institutional Ownership.” 126 Journal of Financial Economics. 122–146.CrossRefGoogle Scholar
  6. Blair, Shelia. 2011. “Lessons of the Financial Crisis: The Dangers of Short-Termism.” 4 July. Harvard Law School Forum on Corporate Governance and Financial Regulation. https://corpgov.law.harvard.edu/2011/07/04/lessons-of-the-financial-crisis-the-dangers-of-short-termism/.
  7. Bowdren, Andrea. 2016. “Contextualising Short-Termism: Does the Corporate Legal Landscape Facilitate Managerial Myopia?” 5:2 UCL Journal of Law and Jurisprudence. 285–312.Google Scholar
  8. Brecht, Kira. 2015. “How U.S. and EU Capital Markets are Different.” 29 October. http://openmarkets.cmegroup.com/10431/how-u-s-and-eu-capital-markets-are-different.
  9. Coffee, John C. 2013. “The Challenge of the Semi-Public Companies.” 1 April. The CLS Blue Sky Blog. http://clsbluesky.law.columbia.edu/2013/04/01/the-challenge-of-the-semi-public-company/.
  10. Cooper, Joe. 2014. “Short-Termism’s Damaging Effect on the Premier League.” 7 May. HuffPost. http://www.huffingtonpost.co.uk/joe-cooper/premier-league-short-termism_b_4904887.html.
  11. Dallas, Lynne L. 2012. “Short-Termism, the Financial Crisis, and Corporate Governance” 2011–2012. 37:2 The Journal of Corporation Law. 265–364.Google Scholar
  12. Fink, Larry. 2018. CEO Letter, BlackRock, Inc. January. https://www.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter.
  13. Grant, Jeremy and Kirchmaier, Thomas. 2004. “Corporate Ownership and Performance in Europe.” April. Centre for Economic Performance, CEP Discussion Paper No. 632.Google Scholar
  14. Haldane, Andrew and Richards, Davies. 2011. “The Short-Long”. Speech at the 29th Société Universitaire Européene de Recherches Financières Colloquium: New Paradigms in Money and Finance? May. Brussels.Google Scholar
  15. Hansmann, Henry and Kraakman, Reinier. 2017. “Chapter 3: The End of History for Corporate Law.” In Mitchell, Lawrence E. (ed.). Corporate Governance: Values Ethics and Leadership. Taylor & Francis Group.Google Scholar
  16. Jacobs, Ben. 2015. “Hillary Clinton Decries Wall Street’s ‘Quarterly Capitalism’ in Tax Reform Pitch.” 24 July. The Guardian.Google Scholar
  17. Johnston, Andrew and Morrow, Paige. 2014. “Commentary on the Shareholder Rights Directive.” University of Oslo Faculty of Law Research Paper No. 2014-41.Google Scholar
  18. Kay, John. 2012. “The Kay Review of UK Equity Markets and Long-Term Decision Making.” Final Report. July.Google Scholar
  19. Koller, Timothy. 1994. “What Is Value-Based Management?” August. McKinsey Quarterly. http://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/what-is-value-based-management.
  20. Kraakman, Reinier, et al. 2009. The Anatomy of Corporate Law: A Comparative and Functional Approach. 2nd ed. Oxford University Press: Oxford.Google Scholar
  21. Kuper, Jeremy. 2012. “Working Lives: Political Short-Termism Perpetuates the Housing Crisis.” 3 October. The Guardian. https://www.theguardian.com/housing-network/2012/oct/03/jeremy-kuper-shelter-political-short-termism.
  22. Lipton, Martin. 2006. “Taking Short-Termism Seriously: A Response to Charles Nathan.” Harvard Law School Forum on Corporate Governance and Financial Regulation. 13 September. https://corpgov.law.harvard.edu/2016/09/13/taking-short-termism-seriously-a-response-to-charles-nathan/.
  23. Lipton, Martin, et al. 2019. “It’s Time to Adopt the New Paradigm.” Harvard Law School Forum on Corporate Governance and Financial Regulation. 11 February. https://corpgov.law.harvard.edu/2019/02/11/its-time-to-adopt-the-new-paradigm/.
  24. Nachemson-Ekwall, Sophie. 2017. “Swedish Institutional Investors as Large Stake Owners: Enhancing Sustainable Stakeholder Capitalism.” 255–276. In Kallifatides, M. and Lerpold, L. (eds.). Sustainable Development and Business. SSE Institute for Research (SIR).Google Scholar
  25. Oyedele, Akin. 2017. “Here Is the Letter the World’s Largest Investor, BlackRock CEO Larry Fink, Just Sent to CEOs Everywhere.” 24 January. Business Insider UK. http://uk.businessinsider.com/blackrock-ceo-larry-fink-letter-to-ceos-2017-1?r=US&IR=T.
  26. Pate, Neil. 2014. “The Psychology of Instant Gratification and How It Will Revolutionize Your Marketing Approach.” 24 June. The Entrepreneur. https://www.entrepreneur.com/article/235088.
  27. Rappaport, Alfred. 2011. Saving Capitalism from Short-Termism: How to Build Long-Term Value and Take Back our Financial Future. New York: McGraw-Hill.Google Scholar
  28. Roe, Mark J. 2013. “Corporate Short-Termism—In the Boardroom and in the Courtroom.” August. 68. Business Lawyer. 977–1006.Google Scholar
  29. Strine, Leo E., Jr. 2015. “Securing Our Nation’s Economic Future: A Sensible, Nonpartisan Agenda to Increase Long-Term Investment and Job Creation in The United States.” University of Pennsylvania Institute for Law & Economics Research Paper No. 15–41.Google Scholar
  30. Surowiecki, James. 2015. “The Short-Termism Myth.” 24 August 2015. The New Yorker. http://www.newyorker.com/magazine/2015/08/24/the-short-termism-myth.
  31. Thakor, Anjan. 2015. “International Financial Markets: A Diverse System Is the Key to Commerce.” Winter. Center for Capital Market Competitiveness. http://www.centerforcapitalmarkets.com/wp-content/uploads/2013/08/021881_SourcesofCapital_fin.pdf.
  32. The Modern Corporation: Corporate Governance for the 21st Century. Statement on Economics. https://themoderncorporation.wordpress.com/economics-and-msv/.
  33. Thornhill, John. 2016. “Rewrite Tax Regimes to Spur Greater Investment.” 6 December 2016. Financial Times.Google Scholar
  34. Turner, Matt. 2016. “Here Is the Letter the World’s Largest Investor, BlackRock CEO Larry Fink, Just Sent to CEOs Everywhere.” 2 February. Business Insider UK. http://uk.businessinsider.com/blackrock-ceo-larry-fink-letter-to-sp-500-ceos-2016-2?r=US&IR=T.

Copyright information

© The Author(s) 2019

Authors and Affiliations

  • Kim M. Willey
    • 1
  1. 1.Faculty of LawUniversity of VictoriaVictoriaCanada

Personalised recommendations