Sunday, March 10, 2013
The Uneasy Case for Favoring Long-Term Shareholders, by Jesse M. Fried, Harvard Law School, was recently posted on SSRN. Here is the abstract:
Proposals to favor long-term shareholders of public firms are based on a widely-held belief: that long-term shareholders, unlike short-term shareholders, benefit from managers maximizing the long-term economic value generated by the firm. This belief, I show, is mistaken. Long-term shareholders, like short-term shareholders, can benefit from managers destroying economic value. My analysis suggests that the case for shifting power from short-term to long-term shareholders is substantially weaker than it might appear.