Garvey, Gerald T; Grant, Simon; King, Stephen P - In: Journal of Industrial Economics 47 (1999) 2, pp. 231-50
Existing models in which stock markets lead to corporate 'short-termism' rely on an exogenously imposed objective for top managers. This paper endogenizes both managers' concern for short-term stock prices and the resulting distortions. The authors show that, when the manager can trade on her...