The Link between Short-termism and Risk: Barriers to Investment in Long-term Infrastructure Projects

Yanovski, Boyan; Lessmann, Kai; Tahri, Ibrahim

doi:10.2139/ssrn.3550501

Cited by 3 publications

(3 citation statements)

References 29 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…As proenvironmental investments are seen to be long-term (ESMA, 2020), it is necessary to change the attitudes of entities that operate on the financial market. On the one hand, companies are seen to focus on achieving short-term goals and profits at the expense of implementing long-term strategies and benefits (Ladika and Sautner, 2019;Yanovski et al, 2020). On the other, the investment horizon is shortened (Atherton et al, 2007;ESMA, 2019).…”

Section: Discussionmentioning

confidence: 99%

“…Companies are beginning to focus more on the short-term meeting of investors' expectations than on long-term development prospects, e.g., they abandon long-term pro-development investments (Ladika and Sautner, 2019). Investors increasingly prefer shorter periods of financial commitment due to growing risk aversion (Yanovski et al, 2020). By contrast, Wang et al (2014) found that investors pay more attention to a company's environmental assessment and long-run sustainability (both economic prosperity and pollution prevention) than profitability in the short run.…”

Section: Literature Review and Hypothesesmentioning

confidence: 99%

See 1 more Smart Citation

The European Union’s Environmental Policy and Long-Term Investments of Enterprises

Janicka¹,

Sajnóg²

2021

ERSJ

View full text Add to dashboard Cite

Purpose: Current European Union efforts are focused on creating regulations that are conducive to long-term investor commitment, i.e. they are fighting short-termism on financial markets. Enterprises that implement the European Union's environmental policy are seen to engage long-term financial resources, which should therefore dominate the structure of their assets. The primary goal of the paper is to ascertain whether a company's high environmental performance (E-index) is positively correlated with the value of its long-term investments. Design/Methodology/Approach: The empirical research is carried out in two parts. The first part presents the correlation between the company's E-index and the share of its long-term investments in total assets. For comparison, we examine these relationships with ESG, as well as the S and G scores. In the second part, we assess the character and strength of the impact of the company's E-index on the value of its long-term investments. This study includes companies listed on 14 Western European stock exchanges, covering the period 2002 to 2019. Findings: Contrary to our assumptions, we find, first, that the environmental index is negatively related to the share of long-term investments in assets in most countries. Second, using panel dataset for the analysed European Union markets, we find evidence that the environmental index negatively affects the value of long-term investments, indicating that the current actions undertaken by the European Union have no empirical justification. Practical Implications: The results of the research may be useful for researchers, practitioners, and regulators from the European Union and the European Union countries in understanding the relationship between a company's E-index and its investments. Originality/Value: There is no research which proves that the increase in long-term investments, and thus the increase in the availability of long-term capital, is of key importance for enterprises, so our research is pioneering and unique.

show abstract

Section: Discussionmentioning

confidence: 99%

Section: Literature Review and Hypothesesmentioning

confidence: 99%

The European Union’s Environmental Policy and Long-Term Investments of Enterprises

Janicka¹,

Sajnóg²

2021

ERSJ

View full text Add to dashboard Cite

show abstract

“…The instability of the contemporary world economy and changes taking place on the international financial markets have contributed to changes in investors' behavior. Investors increasingly prefer shorter periods of financial commitment due to, inter alia, growing risk aversion (Yanovski et al 2020). Currently, investments with a horizon of more than 3 (Atherton et al 2007) or 6 years (ESMA 2019) are seen to be long-term.…”

Section: Introductionmentioning

confidence: 99%

Does Short-Termism Influence the Market Value of Companies? Evidence from EU Countries

Janicka

Pieloch-Babiarz

Sajnóg

2020

JRFM

View full text Add to dashboard Cite

This paper fits into the stream of current research on the concept of short-termism and its importance for economic sustainability, especially sustainable finance. Short-termism focuses on short time horizons by both corporate managers and the financial markets, and prioritizes short-time shareholder return over the long-term growth of the company’s value. This study engages the short-termism discussion by examining the effect of quarterly reporting on the long-term market value of listed companies. The aim of the article is to determine whether European companies experience the negative effects of short-termism, precisely, whether public companies that prepare quarterly reports, and which focus mainly on achieving the short-term goals of stock exchange investors, are seeing a decline in their market value in the long-term. We have not proven the existence of such a dependence, the increase in reporting frequency of public companies does not contribute to a decline in their long-term market value. In the case of the EU-15 the results of regression model estimation indicate a positive and statistically significant impact of the time of regular quarterly reporting on the buy-and-hold rates of return, in the “new” EU member states this relationship is not observed.

show abstract

Financing the Green Recovery: The New Directions of Finance After the COVID-19 Crisis

Rizzello

2022

Palgrave Studies in Impact Finance

View full text Add to dashboard Cite

The Link between Short-termism and Risk: Barriers to Investment in Long-term Infrastructure Projects

Cited by 3 publications

References 29 publications

The European Union’s Environmental Policy and Long-Term Investments of Enterprises

The European Union’s Environmental Policy and Long-Term Investments of Enterprises

Does Short-Termism Influence the Market Value of Companies? Evidence from EU Countries

Financing the Green Recovery: The New Directions of Finance After the COVID-19 Crisis

Contact Info

Product

Resources

About