Myopic management and short-termism in marketing

Abstract

In the first essay of my dissertation, I draw on agency theory and marketing strategy and develop a set of hypotheses that explore whether the investment horizon of institutional investors moderate the impact of a firm’s product innovation on its financial value. In the second essay, I examine the antecedents of myopic marketing which refers to the relatively common practice among publicly traded companies of reducing so-called discretionary expenses in an effort to show improved current-period financial performance. Using agency theory, I propose that myopic management depends on external and internal influences. I measure the impact of the antecedent factors on 1) the odds that firms would engage in the practice of myopic management, and 2) subsequent firm performance of firms that do so. In essay three I focus on a measure of managerial short-termism which captures a wide range of drivers of intertemporal managerial decision making. I code and textually analyze language patterns of senior management in conference calls and test the consequences for marketing and innovation and firm performance.