07 Jan 2021

Are European listed corporations short-termist?

Karel Lannoo / Jesper Lau Hansen / Apostolos Thomadakis

0
Download Publication

3236 Downloads

A recent study prepared for the EU Commission has found that EU listed companies are increasingly focused on the short-term financial benefits of shareholders rather than long-term interests and sustainable value creation. It argues that the root causes of this behaviour lie within the regulatory framework and market practices (i.e. lack of a strategic perspective on sustainability, short-term focus of board-member mandates, and remuneration), and alleges that this will both undermine the investment capacity of firms and harm cash balances.

In response to this alleged short-termism, the EU Commission is considering a series of measures such as: harmonising directors’ duties and board composition; incentivising long-term shareholding; reducing quarterly reporting; and broadening reporting targets. The study’s conclusions were strongly contested by top academics in both the EU and the US – a challenge that was at first not matched by the relevant European professional associations.

Related Publications

Browse through the list of related publications.

Enhancing capital market financing for Europe’s growth companies

Towards a Resilient and Sustainable Post-Pandemic Recovery Working Group Report of the New Industrial Strategy for Europe Task Force

Healthcare and Pharmaceuticals

Towards a Resilient and Sustainable Post-Pandemic Recovery Working Group Report of the New Industrial Strategy for Europe Task Force

Basel III Finalisation

The impact on EU banks and the real economy across scenarios