Shareholder myopia and managerial opportunism

Noe, Thomas (1994) Shareholder myopia and managerial opportunism. In: Financial Management Association Annual Conference, 18 October, 1994, Saint Louis, Missouri.

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It is generally acknowledged that myopic investment policies are one of the pressing problems facing U.S. industry. This paper provides a rationale for such myopic investment policies based on managerial opportunism and the allocation of control rights between shareholders and managers. In the analysis, shareholder myopia is a rational response to the hold-up problem engendered by the ability of managers to opportunistically exploit their capacity to generate firm- specific rents. Active shareholder control of the firm's policies exacerbates this myopic tendency. In contrast, when shareholder control is weak, the hold-up problem can mitigate investment distortions.

Item Type: Conference or Workshop Item (Paper)
Keywords: Myopic investment policies; Control rights; Managerial opportunism; finance
Subject(s): Finance
Date Deposited: 07 Jun 2012 08:39
Last Modified: 01 Mar 2017 12:01
Funders: N/A

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