Q: In general, what relationship did you find between companies you identified as short-term-oriented, their investors, and the behavior of their stocks?
Q: What is the big takeaway here for investors, especially those seeking to invest in companies with longer-term perspectives?
The finding that more long-term-oriented firms have lower volatility and cost of capital has implications for capital allocation. Investors who care about the volatility of their portfolio should factor in their decisions the time horizon of the corporation. That generates a need for more data that help investors separate companies that are short-term-oriented versus long-term-oriented. Developing a robust data infrastructure that separates companies could have profound implications and incentivize companies to become more long-term-oriented.