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

38 Pages Posted: 13 Oct 2020 Last revised: 3 Mar 2021

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 (HBS)

Date Written: February 9, 2021


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.

Keywords: short-termism; EU; payout policy; investment; innovation

JEL Classification: G15, G32, G35, G38, O52

Suggested Citation

Fried, Jesse M. and Wang, Charles C. Y., Short-Termism, Shareholder Payouts, and Investment in the EU (February 9, 2021). European Financial Management, Forthcoming, 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
Rue Ducale 1 Hertogsstraat
1000 Brussels

Charles C. Y. Wang (Contact Author)

Harvard Business School (HBS) ( email )

Soldiers Field
Boston, MA 02163
United States

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