Short-Termism, Shareholder Payouts, and Investment in the EU

Short-Termism, Shareholder Payouts, and Investment in the EU

Jesse Fried, Charles Wang

Series number :

Serial Number: 

Date posted :

October 16 2020

Last revised :

February 23 2021
SSRN Share


  • short-termism; EU; payout policy; investment; innovation

Investor-driven “short-termism” is said to harm EU public firms’ ability to invest for the long term, prompting calls for the EU to better insulate managers from shareholder pressure. But the evidence offered—rising levels of repurchases and dividends—is incomplete and misleading: it ignores large offsetting equity issuances that move capital from investors to EU firms.

We show that, over the last 30 years and the last decade, net shareholder payouts have been moderate, and investment and cash balances have increased. In sum, the data provide little basis for the view that short-termism in the EU warrants corporate governance reforms.

Published in

Published in: 
Publication Title: 
Forthcoming, European Financial Management