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References (1)
-
Acemoglu (2009)
The colonial origins of comparative development: An empirical investigationAmerican Economic Review, 91
- Publisher
- Oxford University Press
- Copyright
- © The Author 2014. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail: [email protected].
- ISSN
- 0893-9454
- eISSN
- 1465-7368
- DOI
- 10.1093/rfs/hhu077
- Publisher site
- See Article on Publisher Site
Abstract
We investigate whether short-termism distorts the investment decisions of stock market-listed firms. To do so, we compare the investment behavior of observably similar public and private firms, using a new data source on private U.S. firms and assuming for identification that closely held private firms are subject to fewer short-termist pressures. Our results show that compared with private firms, public firms invest substantially less and are less responsive to changes in investment opportunities, especially in industries in which stock prices are most sensitive to earnings news. These findings are consistent with the notion that short-termist pressures distort investment decisions.
Journal
The Review of Financial Studies – Oxford University Press
Published: Feb 27, 2015