Long-term firm gains from short-term managerial focus: Myopia and voluntary disclosures

• 成果类型: Article
• 署名作者: Arya, Anil; Ramanan, Ram N. V.
• 署名单位: University System of Ohio; Ohio State University; Indian School of Business (ISB)
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2023.101646
• 发表日期: 2024
• 关键词: Incentives; essays

摘要

A CEO's short horizon and associated myopic actions are typically viewed as detrimental to the firm. In contrast, studying a voluntary disclosure model wherein capital market and product market strategic considerations are in play, we show that the CEO's myopic behavior can improve a firm's long-term value. In particular, the disclosures of a longhorizon CEO are seen as being entirely focused on the firm's interests and thus as being exploitative of customers. A short -horizon CEO myopically focused on short-term stock price is less aligned with the firm and, consequently, her disclosures are more customer friendly. As a corollary, when no disclosure is forthcoming, customers are less skeptical that the myopic CEO is withholding information to exploit them. This improves customers' willingness to pay with a myopic CEO, leading to higher firm profitability. The paper also layers in compensation design to derive the optimal degree of managerial short-term focus to induce. (c) 2023 Elsevier B.V. All rights reserved.