Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/168353
Authors: 
Agarwal, Vikas
Vashishtha, Rahul
Venkatachalam, Mohan
Year of Publication: 
2017
Series/Report no.: 
CFR Working Paper 16-10
Abstract: 
Pressure from institutional money managers to generate profits in the short run is often blamed for corporate myopia. Theoretical research suggests that money managers' short term focus stems from their career concerns and greater fund transparency can amplify these concerns. Using a difference-in-differences design around a regulatory shock that increased transparency about fund managers' portfolio choices, we examine whether increased transparency encourages myopic corporate investment behavior. We find that corporate innovation declines following the regulatory shock. Moreover, evidence from mutual fund trading behavior corroborates that these results are driven by increased short-term focus of money managers.
Document Type: 
Working Paper

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