Time horizons and corporate governance

Davin Raiha

American Journal of Finance and Accounting, 2019, vol. 6, issue 1, 77-100

Abstract: This paper examines the impact of operational time-horizons on corporate governance. Managerial 'short-termism' is problematic in industries where long product development and life cycles require managerial decisions that are similarly far-sighted in scope. By protecting managers from the pressures that induce short-termism I show how corporate governance and anti-takeover provisions can mitigate short-termism for firms with long operational time-horizons. I predict that firms operating in long time-horizon industries will employ more anti-takeover provisions than firms in short time-horizon industries. I examine this empirically and find support for this prediction.

Keywords: governance; time-horizon; anti-takeover provisions; ATP; short-termism; managerial myopia; product development cycle; product life cycle. (search for similar items in EconPapers)
Date: 2019
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