Investors are not a homogeneous group. They comprise a broad spectrum of shareholders who differ, among other things, in terms of their investment horizon. While investors with a short investment horizon want to maximize current stock prices, as they expect to exit their positions soon, long-term investors seek to maximize the present value of future cash flows (e.g., Gaspar et al., 2004;Stein, 1996). In recent decades, researchers have begun focusing on distinguishing between shareholders in this manner, particularly in the context of CEO remuneration (
Using a sample of comparably sized public listed and private firms from nine European countries, we show that public firms reduce their investments by about 50% more than private firms in response to an increase in policy-related uncertainty. We find suggestive evidence that this can be explained by public firms’ management being typically subject to greater shareholder scrutiny than private firms’ management. Furthermore, only public firms invest more efficiently when confronted with uncertainty. Thus, private firms may benefit from emulating the decision-making processes of public firms in uncertain times.
Theoretical arguments suggest that better environmental performance can lead to cost advantages through a more efficient use of resources and higher labor productivity. To provide empirical support for these arguments, we investigate how environmental performance affects operating costs using a sample of 785 U.S. firms for the period 2006–2014. We find that better environmental performance is negatively associated with direct production costs, but increases overhead costs. Because direct production costs have a larger impact than overhead costs, aggregate operating costs decline as environmental performance improves. To deal with endogeneity and to interpret the results causally, we use an instrumental variables approach.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.