short-termism

Game of Votes: The Lifecycle Logic of Tenure Voting Rights

By Maria Lucia Passador May 9, 2025 by renholding

Tenure voting rights, which grant increased voting power to long-term shareholders, reward duration, stability, and strategic patience. They allow founders and insiders to maintain control while accessing public capital. And when structured carefully, they can help create a shareholder base

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How Tenure-Based Voting Regimes Affect Minority Shareholders

By Maria Lucia Passador April 25, 2025 by renholding

In a new paper, I offer a comprehensive, empirically grounded reflection on the evolving architecture of corporate governance in Europe, with a particular emphasis on the Italian regulatory and market experience. My focus is on whether tenure voting rights, which

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Stakeholder Governance and the Eclipse of Shareholder Primacy

By Martin Lipton and Kevin S. Schwartz May 8, 2024 by renholding

For decades, advocates of “shareholder primacy” as the North Star of corporate governance have steered our leading corporations and our Nation’s economic engine perilously off-course.  Since the 1970s, when the work of Milton Friedman, Michael Jensen, and Frank …

The Role of Controlling Shareholders Is Missing from the Debate over Short-Termism

By Tom Vos August 7, 2023 by renholding

The debate over short-term thinking at corporations has so far focused largely on companies in the U.S. and the UK. The fact that controlling shareholders are less common in those countries than in many others may explain why the extensive …

What Is Stock Market Short-Termism?

By Mark Roe September 16, 2022 by renholding

What is stock market short-termism? It’s important to know the boundaries between stock market short-termism and other economic ills, because in public discourse many social and economic woes are mistakenly attributed to stock market myopia. But when we mistakenly categorize …

Do Activists Increase Long-Term Shareholder Value? New Evidence that Includes Non-Hedge Fund Activists

By Edward Swanson, Glen Young and Christopher G. Yust December 23, 2021 by renholding

Shareholder activists are often accused of having short investment horizons and thus pushing companies to increase their stock prices at the expense of long-term shareholder value (“short-termism”). These accusations have prompted extensive research on interventions by hedge funds. In a …

A Call for Reflection on Sustainable Corporate Governance

By Alex Edmans, Luca Enriques, Jesse Fried, Mark J. Roe and Steen Thomsen April 29, 2021 by renholding

Together with other European Corporate Governance Institute (ECGI) research members, we have recently issued a Call for Reflection on Sustainable Corporate Governance to express our concerns over the risk that new legislation on EU companies’ governance is adopted without properly …

Biden and the SEC: Some Possible Agendas

By John C. Coffee, Jr. December 2, 2020 by renholding

This is the gossip season, and almost everyone has heard a rumor about who will be the next chair of the SEC. Although I was interviewed by the Biden transition team (for my views, not as a candidate), my sources …

The European Commission Considers “Short-Termism” (and “What Do You Mean by That?”)

By John C. Coffee, Jr. November 16, 2020 by renholding

The European Commission retained Ernst & Young (“EY”) to undertake a detailed study of “short-termism” and, implicitly, to report whether it was a major roadblock to more sustainable corporate governance. Their study was then presented at a three day international …

A Critique of the Sustainable Corporate Governance Report from the European Commission

By Mark Roe, Holger Spamann, Jesse Fried and Charles Wang November 9, 2020 by renholding

In July 2020, the European Commission published the “Study on directors’ duties and sustainable corporate governance” by EY. The report purports to find evidence of debilitating short-termism in EU corporate governance and recommends many changes to support sustainable …

Milton Friedman’s Essay and the True Purpose of the Business Corporation

By Martin Lipton September 18, 2020 by renholding

From a practical standpoint, the most significant part of the 1970 Milton Friedman essay in the New York Times was the headline: “The Social Responsibility Of Business Is to Increase its Profits.”  For a half-century, that phrase has …

Wachtell Lipton on the Purpose of the Corporation

By Martin Lipton, Steven A. Rosenblum, William Savitt and Karessa L. Cain May 27, 2020 by renholding

The growing view that corporations should take into account environmental, social and governance (ESG) issues in running their businesses, and resistance from those who believe that companies should be managed solely to maximize share price, has intensified the focus on …

Does Reporting Frequency Affect the Allocation of Investor Attention Among Peer Firms? 

By Emmanuel T. De George, Minh Phan and Robert C. Stoumbos September 12, 2019 by renholding

The frequency at which public companies must report financial information to investors has been the subject of intense debate in the European Union, Asia, and more recently the United States. For example, the Securities and Exchange Commission (SEC) is examining …

Wachtell Lipton Discusses Stakeholder Governance and the Fiduciary Duties of Directors

By Martin Lipton, Karessa L. Cain and Kathleen C. Iannone September 3, 2019 by renholding

There has recently been much debate and some confusion about a bedrock principle of corporate law – namely, the essence of the board’s fiduciary duty, and particularly the extent to which the board can or should or must consider the …

SEC Chairman Clayton Kicks Off SEC Roundtable on Short-Termism

By Jay Clayton July 22, 2019 by renholding

Bill [Hinman] thanks a lot. I’m going to highlight three items to try and kick us off here. First, a thank you to Bill, Coy, Shelley and the other staff from the Division of Corporation Finance for the work you

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How Taxing Short-Term Share Profits Can Foster Innovation

By Eric He, Martin Jacob, Rahul Vashishtha and Mohan Venkatachalam June 19, 2019 by renholding

If short-termism shackles innovation, how do we break the chains? Our evidence suggests that increasing capital gains taxes for investors on short-term share appreciation is one possible solution.

Research shows that myopic focus on short-term earnings hurts investments in research …

Wachtell Lipton Discusses Corporate Purpose—Stakeholders and Long-Term Growth

By Martin Lipton, Steven A. Rosenblum, Karessa L. Cain and Sabastian V. Niles June 3, 2019 by renholding

Until recently, the dialogue on corporate governance has focused almost exclusively on how to increase the ability of shareholders to impose their will on corporations. Shareholder groups, advisory firms and academics continually developed and added to a set of “best …

SEC Chairman Announces Roundtable on Management, Reporting, and Regulation

By Jay Clayton May 22, 2019 by renholding

Our capital markets benefit from a level of retail investor participation that is unparalleled among the world’s large industrialized countries. Our Main Street investors who, day in and day out, put their hard-earned money to work for the long term

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Do Share Buybacks Deserve More Regulatory Scrutiny?

By Georges Ugeux April 29, 2019 by renholding

In 2018, U.S. companies spent $1 trillion to buy back their shares, while they spent $4 trillion to do so between 2008 and 2017. This is raising strong criticism from different quarters in the political sphere. Not only do key …

Mergers and the Role of Earnings-Per-Share

By Sudipto Dasgupta, Jarrad Harford and Fangyuan Ma April 8, 2019 by renholding

Lawyers and investors pay close attention to how stock-based deals affect the acquirer’s short-term earnings per share (EPS). Merger announcements are regularly accompanied by discussions of whether the deal will be accretive or dilutive for the acquirer’s EPS, and if …