Abstract

http://ssrn.com/abstract=1999484
 
 

References (92)



 


 



Short-termism, Investor Clientele, and Corporate Performance


Francois Brochet


Harvard Business School

Maria Loumioti


University of Southern California

George Serafeim


Harvard University - Harvard Business School

November 2013

Harvard Business School Accounting & Management Unit Working Paper No. 12-072

Abstract:     
Using conference call transcripts to measure the time horizon that senior executives emphasize when they communicate with investors, we develop a measure of corporate short-termism. We find that the measure of short-termism is associated with various proxies for earnings management, suggesting that our proxy partially captures opportunistic behavior. We also show that firms focusing more on the short-term have a more short-term oriented investor base, and fewer analysts issuing long-term forecasts, suggesting that corporate and capital market short-termism are related. Moreover, consistent with analytical models that emphasize the costly nature of short-termism, we find that short-term oriented firms exhibit lower future accounting and stock market performance and a higher implied cost of capital.

Number of Pages in PDF File: 54

Keywords: short termism, corporate performance, conference calls, investor base, risk, cost of capital

JEL Classification: G12, G14, G21, M41

working papers series


Download This Paper

Date posted: February 6, 2012 ; Last revised: December 17, 2013

Suggested Citation

Brochet, Francois and Loumioti, Maria and Serafeim, George, Short-termism, Investor Clientele, and Corporate Performance (November 2013). Harvard Business School Accounting & Management Unit Working Paper No. 12-072. Available at SSRN: http://ssrn.com/abstract=1999484 or http://dx.doi.org/10.2139/ssrn.1999484

Contact Information

Francois Brochet
Harvard Business School ( email )
Soldiers Field Road
Morgan Hall 369
Boston, MA 02163
United States
617 495 9329 (Phone)
Maria Loumioti
University of Southern California ( email )
Los Angeles, CA 90089
United States
George Serafeim (Contact Author)
Harvard University - Harvard Business School ( email )
381 Morgan Hall
Boston, MA 02163
United States
HOME PAGE: http://drfd.hbs.edu/fit/public/facultyInfo.do?facInfo=ovr&facId=15705
Feedback to SSRN


Paper statistics
Abstract Views: 6,502
Downloads: 1,494
Download Rank: 5,768
References:  92

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo6 in 0.313 seconds