Are US Firms Becoming More Short-Term Oriented? Evidence of Shifting Firm Time Horizons from Implied Discount Rates, 1980-2013

Other Titles
Abstract

Whether US firms have become more short-term oriented remains an active debate among managers, investors, researchers, and policymakers. In this study, we report that investors have been increasingly discounting the expected future returns of public firms over the last three decades. We find that a firm’s discounting rate is explained by signals of its long-term strategy, including investment decisions, ownership structure, financial health, executive compensation scheme, and short-term pressures from the external environment. Our findings indicate a market-wide contraction of firm time horizons, highlighting firm characteristics that suggest how and why firms differ in their time horizons. These demonstrated relationships may help guide firms in devising investment strategies as well as external communications to attract investors that share a firm’s preferred time horizon.

Journal / Series
Volume & Issue
Description
Sponsorship
Date Issued
2020-09-17
Publisher
Keywords
short-termism, myopia, institutional investing, R&D investment, CEO compensation
Location
Effective Date
Expiration Date
Sector
Employer
Union
Union Local
NAICS
Number of Workers
Committee Chair
Committee Co-Chair
Committee Member
Degree Discipline
Degree Name
Degree Level
Related Version
Related DOI
Related To
Related Part
Based on Related Item
Has Other Format(s)
Part of Related Item
Related To
Related Publication(s)
Link(s) to Related Publication(s)
References
Link(s) to Reference(s)
Previously Published As
Government Document
ISBN
ISMN
ISSN
Other Identifiers
Rights
Attribution-NonCommercial-NoDerivatives 4.0 International
Types
article
Accessibility Feature
Accessibility Hazard
Accessibility Summary
Link(s) to Catalog Record