Sampson and Shi (2019)

Sampson, Rachelle, and Yuan Shi. “Are US Firms Becoming More Short-Term Oriented? Evidence of Shifting Firm Time Horizons from Implied Discount Rates, 1980-2013.” Working paper (University of Maryland), October 1, 2019.

From the authors’ abstract: “We provide evidence that investors in US public markets are increasingly discounting firms’ expected future cash flows during 1980-2013. This trend is shown not only on average across firms, but also within firms over time after alternative explanations are accounted for. To corroborate a link with firm time horizons, we estimate the relationship between an implied discount rate (‘IDR’) and factors relevant to firm long-term strategy. We find that IDR is correlated in expected ways with firm investments, management incentives, financial health, ownership and external pressures - measures that have been argued to correlate with firm time horizons.”

LK comment: Finds correlation between longer time horizons and TruValue Labs ESG rating. Presented at SASB Symposium, December 3, 2019.

Link: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2837524