The short-termism trap: Catering to informed investors with limited horizons

IF 10.4 1区 经济学 Q1 BUSINESS, FINANCE
James Dow , Jungsuk Han , Francesco Sangiorgi
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引用次数: 0

Abstract

Does the stock market exert short-term pressure on listed firms, do they respond, and is this response value reducing? We show that limited investor horizons indeed have those consequences, as follows. First, informative stock prices increase firm value; in our model, they reduce the agency cost of incentivizing managers. Second, short project maturity improves stock price informativeness by catering to informed investors with short horizons. Third, since informed trading capital is a scarce resource, attracting informed investors cannot increase an individual firm’s price informativeness in equilibrium: it simply destroys shareholder value. This “short-termism trap” can potentially destroy up to 100% of the benefits of stock market listing.

短期陷阱:迎合视野有限的知情投资者
股市是否会对上市公司施加短期压力,上市公司是否会做出反应,这种反应是否会降低价值?我们的研究表明,有限的投资者视野确实会产生以下后果。首先,信息丰富的股票价格会增加公司价值;在我们的模型中,信息丰富的股票价格会降低激励经理人的代理成本。其次,项目期限短可以迎合短视的知情投资者,从而提高股票价格的信息量。第三,由于知情交易资本是一种稀缺资源,吸引知情投资者并不能在均衡状态下提高单个公司的价格知情度:它只会破坏股东价值。这种 "短期陷阱 "有可能摧毁股票市场上市带来的高达 100%的收益。
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来源期刊
CiteScore
15.80
自引率
4.50%
发文量
192
审稿时长
37 days
期刊介绍: The Journal of Financial Economics provides a specialized forum for the publication of research in the area of financial economics and the theory of the firm, placing primary emphasis on the highest quality analytical, empirical, and clinical contributions in the following major areas: capital markets, financial institutions, corporate finance, corporate governance, and the economics of organizations.
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