Title: Time horizons and corporate governance

Authors: Davin Raiha

Addresses: Kelley School of Business, Indiana University, 1309 East Tenth Street, Bloomington, IN 47405, USA

Abstract: This paper examines the impact of operational time-horizons on corporate governance. Managerial 'short-termism' is problematic in industries where long product development and life cycles require managerial decisions that are similarly far-sighted in scope. By protecting managers from the pressures that induce short-termism I show how corporate governance and anti-takeover provisions can mitigate short-termism for firms with long operational time-horizons. I predict that firms operating in long time-horizon industries will employ more anti-takeover provisions than firms in short time-horizon industries. I examine this empirically and find support for this prediction.

Keywords: governance; time-horizon; anti-takeover provisions; ATP; short-termism; managerial myopia; product development cycle; product life cycle.

DOI: 10.1504/AJFA.2019.104191

American Journal of Finance and Accounting, 2019 Vol.6 No.1, pp.77 - 100

Received: 04 Mar 2019
Accepted: 18 Jul 2019
Published online: 20 Dec 2019 *

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