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Mark J. Roe, Corporate Short-Termism: In the Boardroom and in the Courtroom, in The Oxford Handbook of Corporate Law and Governance 425 (Jeffrey N. Gordon & Wolf-Georg Ringe eds., 2018).

Abstract: In this chapter I examine whether short-termism in stock markets justifies using corporate law to further shield managers and boards from shareholder influence, to allow boards and managers to pursue their view of sensible long-term strategies in their investment and management policies even more freely. First, the evidence that on stock market short-termism is mixed and inconclusive, with managerial mechanisms under-rated sources of short-term distortions, including managerial compensation packages whose duration often is shorter than that of institutional stockholding; further insulating boards from markets would exacerbate these managerial short-term-favoring mechanisms. Nor are courts well positioned to make this kind of basic economic policy, which if serious is better addressed with policy tools unavailable to courts.