Does Short-Termism Influence the Market Value of Companies? Evidence from EU Countries

Małgorzata Janicka, Aleksandra Pieloch-Babiarz and Artur Sajnóg
Additional contact information
Małgorzata Janicka: Department of International Finance and Investments, Faculty of Economics and Sociology, University of Lodz, Rewolucji 1905 Street 41, 90-255 Lodz, Poland
Aleksandra Pieloch-Babiarz: Department of International Finance and Investments, Faculty of Economics and Sociology, University of Lodz, Rewolucji 1905 Street 41, 90-255 Lodz, Poland
Artur Sajnóg: Department of International Finance and Investments, Faculty of Economics and Sociology, University of Lodz, Rewolucji 1905 Street 41, 90-255 Lodz, Poland

JRFM, 2020, vol. 13, issue 11, 1-22

Abstract: This paper fits into the stream of current research on the concept of short-termism and its importance for economic sustainability, especially sustainable finance. Short-termism focuses on short time horizons by both corporate managers and the financial markets, and prioritizes short-time shareholder return over the long-term growth of the company’s value. This study engages the short-termism discussion by examining the effect of quarterly reporting on the long-term market value of listed companies. The aim of the article is to determine whether European companies experience the negative effects of short-termism, precisely, whether public companies that prepare quarterly reports, and which focus mainly on achieving the short-term goals of stock exchange investors, are seeing a decline in their market value in the long-term. We have not proven the existence of such a dependence, the increase in reporting frequency of public companies does not contribute to a decline in their long-term market value. In the case of the EU-15 the results of regression model estimation indicate a positive and statistically significant impact of the time of regular quarterly reporting on the buy-and-hold rates of return, in the “new” EU member states this relationship is not observed.

Keywords: sustainable finance; short-termism; quarterly reporting; market value of companies; EU countries (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://www.mdpi.com/1911-8074/13/11/272/pdf (application/pdf)
https://www.mdpi.com/1911-8074/13/11/272/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jjrfmx:v:13:y:2020:i:11:p:272-:d:440880

Access Statistics for this article

JRFM is currently edited by Ms. Chelthy Cheng

More articles in JRFM from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().