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

34 Pages Posted: 13 Oct 2020 Last revised: 15 Oct 2020

See all articles by Jesse M. Fried

Jesse M. Fried

Harvard Law School; European Corporate Governance Institute (ECGI)

Charles C. Y. Wang

Harvard Business School

Date Written: October 9, 2020


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---in the form of rising levels of repurchases and dividends---is incomplete and misleading, as it ignores large offsetting equity issuances that move capital from investors to EU firms. We show that net shareholder payouts have been moderate, that both investment levels and investment intensity have been rising, and that cash balances have increased. In sum, the data provide little basis for the view that short-termism in the EU warrants corporate governance reforms.

Keywords: short-termism; quarterly capitalism; corporate governance; EU; buybacks; repurchases; dividends; equity issuances; equity compensation; acquisitions; payout policy; capital flows; capital distribution; CAPEX; R&D; investment; innovation

JEL Classification: G14, G32, K22

Suggested Citation

Fried, Jesse M. and Wang, Charles C. Y., Short-Termism, Shareholder Payouts, and Investment in the EU (October 9, 2020). European Corporate Governance Institute - Law Working Paper 544/2020, Available at SSRN: or

Jesse M. Fried

Harvard Law School ( email )

1575 Massachusetts
Griswold Hall 506
Cambridge, MA 02138
United States
617-384-8158 (Phone)


European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
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1000 Brussels

Charles C. Y. Wang (Contact Author)

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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