Corporate Investment and Stock Market Listing: A Puzzle?

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ID: 307264
2014
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Abstract
We investigate whether short-termism distorts the investment decisions of stock market-listed firms. To do so, we compare the investment behavior of observably similar public and private firms, using a new data source on private U.S. firms and assuming for identification that closely held private firms are subject to fewer short-termist pressures. Our results show that compared with private firms, public firms invest substantially less and are less responsive to changes in investment opportunities, especially in industries in which stock prices are most sensitive to earnings news. These findings are consistent with the notion that short-termist pressures distort investment decisions.
Reference Key
openalex_W3125036249 Use this key to autocite in the manuscript while using SciMatic Manuscript Manager or Thesis Manager
Authors John Asker, Joan Farre-Mensa, Alexander Ljungqvist
Journal review of financial studies
Year 2014
DOI
10.1093/rfs/hhu077
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