Dynamics of value-based management: does shareholder value cause short-termism?

Robert Rieg

Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, 2015, vol. 26, issue 2, 193-224

Abstract: Shareholder value (SHV) and value-based management (VBM) are blamed for causing short-termism of investors and managerial myopia. Empirical evidence states decreased holding periods of stocks by investors, increased discount rates and widespread adoption of earnings management. While this supports the existence of short-termism and myopia, it does not clarify its causes. To date, it is not clear if SHV and value-based management cause short-termism in the behavior of investors and managers. The paper uses system dynamics to model both concepts and to try to explain short-termism and myopia as endogenous outcome of these concepts. The contribution to the debate on short-termism is to better understand the role of SHV and VBM in explaining short-termism, effects of policies to mitigate it, and to direct future empirical research as well as advancing modeling of SHV and VBM. Copyright Springer-Verlag Berlin Heidelberg 2015

Keywords: Shareholder value; Short-termism; System dynamics; Simulation; Value-based management (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://hdl.handle.net/10.1007/s00187-015-0211-4 (text/html)
Access to full text is restricted to subscribers.

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:spr:jmgtco:v:26:y:2015:i:2:p:193-224

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/187

DOI: 10.1007/s00187-015-0211-4

Access Statistics for this article

Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung is currently edited by Thomas Günther

More articles in Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().