Governing Economic Short-Termism

Abstract

This book examines how corporations in different capitalist economies respond to stock market pressures and why they respond in the ways they do. It shows that publicly listed firms in the United States and the United Kingdom have made significantly higher shareholder payouts than their German and Japanese counterparts. The book demonstrates that corporate short-termism is a distinctive feature of contemporary Anglo-American capitalism, with implications for inequality, employment, and innovation. The book emphasises the interaction of structural, institutional, and ideational factors in explaining corporate short-termism and cross-national differences. Stock market structures can generate pressures for short-term shareholder returns but these structures are shaped and mediated by national institutions and ideas about who deserves what. This produces cross-national differences in takeover threats, managerial incentives, and investor power, which in turn shape corporate behaviour. The book brings ideas more fully into comparative capitalism and corporate governance. It argues that the normative contestability of dispersed shareholder rights arising from the nature of contemporary stock market–based shareholding provides the foundation for cross-national divergence in governance practices and managerial orientation. It shows how institutional and historical factors produce more employee-favouring views in Germany and Japan than in Anglo-America, where shareholder primacy dominates. The book develops an actor-centred “bounded discretion” framework that fuses ideational, structural, and institutional factors. It explains variation in payouts, investment, and employment security by tracing how these factors jointly constrain managerial decisions. This helps clarify why Japanese capitalism remains stakeholder-oriented despite the prevalence of shareholder-favouring formal institutions.