The Primary Performance Trait of Corporations with High Managerial Short-Termism

The aim of this paper is to investigate and summarize three factors that contribute to short-termism in corporate management: CEO (Chief Executive Officer) equity incentive, takeover threat, and short-term institutional investors. Management short-termism has always been the focus of attention, and this paper also wants to infer the characteristics of management short-termism by analyzing these three factors which have been studied by literatures. First, the analysis of the relationship between CEO equity incentive and management short-termism focuses on demonstrating causality and measuring long-term effects. Second, the analysis of managers’ short-sighted behavior prompted by the threat of takeover is conducted primarily through the lens of the impact of takeover protection clauses and managers’ willingness to invest in the complexity of investment. Third, the analysis of short-termism promoted by short-term institutional investors focuses on three factors: agency cost between shareholders and creditors, internal control quality, and sensitivity to short-term performance appearances. This paragraph provides a comprehensive overview of the different factors that contribute to managerial short-termism, which is a critical issue faced by organizations in the modern business environment.