Governing Economic Short-Termism : Why Shareholder Power Varies Across Economies

This book explains why corporations in some countries prioritise short-term shareholder returns while others take a longer-term approach; argues why public firms in Anglo-America pay out far more to shareholders; and offers a clear account of why corporate behaviour differs across capitalist economies and what this means for workers and firms.

Governing Economic Short-Termism examines how corporations in different capitalist economies respond to financialisation and stock market pressures and why they respond in the ways they do. It demonstrates that corporate short-termism – a sustained focus on short-term shareholder value at the expense of employees and a firm''s long-term productive capacity – is a distinctive feature of contemporary Anglo-American capitalism and that Germany and Japan continue to diverge. It has macro-level implications not only for inequality and unemployment but also for innovation and competitiveness.The book emphasises the interaction of structural, institutional, and ideational factors. Stock market structures can generate pressures for short-term shareholder returns, but these structures are themselves shaped and mediated by national institutions and ideas about who deserves what. This produces national differences in managerial remuneration structures, hostile takeover threats, and the power of institutional investors, which shape corporate behaviour.The central contribution of the book is to bring ideas more fully into comparative capitalism and corporate governance. It argues that the normative contestability of the rights of dispersed shareholders arising from the nature of contemporary stock-market-based shareholding provides an important foundation for cross-national divergence in corporate governance practices and managerial orientation. It shows how institutional and historical factors make for relatively employee-favouring views in Germany and Japan compared to Anglo-America, where ''shareholder primacy'' dominates.Governing Economic Short-Termism develops a theoretical framework that fuses ideational factors with structural and institutional factors. This framework helps explain not only the divergence between Anglo-American capitalism and German and Japanese capitalism, but also why Japanese capitalism is stakeholder-oriented despite formal institutions being shareholder-favouring.