Don't look too much at the score! just play
We investigate whether short-termism distorts the investment decisions of stock
market listed firms. To do so, we compare the investment behavior of observably
similar public and private firms using a new data source on private U.S. firms,
assuming for identification that closely held private firms are subject to fewer shorttermist
pressures. Our results show that compared to private firms, public firms invest
substantially less and are less responsive to changes in investment opportunities,
especially in industries in which stock prices are most sensitive to earnings news.
These findings are consistent with the notion that short-termist pressures distort their
investment decisions.
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As Holmström (1982), Narayanan (1985), Miller and Rock (1985), Stein (1989), Shleifer and Vishny (1990), and von Thadden (1995) have argued, a focus on a firm’s short-term profits or its current share price will distort investment decisions from the first-best if investors have incomplete information about how much the firm should invest to maximize its long-term value. Foregoing positive NPV projects boosts current earnings, and thereby today’s share price, by reducing “depreciation charges to earnings or other start-up charges” (Graham, Harvey, and Rajgopal (2005)).
Asker, John, Joan Farre-Mensa, and Alexander Ljungqvist (2014)
There is nothing new here. Public companies are obsessed about the quarterly numbers on top of this they have a huge amount of regulation that private companies don't. There is no point to be listed these days.
Transparency is something that doesn't make sense, it's like giving secrets to your competitors.
keep your game for yourself if you can!
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