Stock markets, shareholder value and investment

Stockhammer, Engelbert ORCID: (2003) Stock markets, shareholder value and investment. Working Papers Series "Growth and Employment in Europe: Sustainability and Competitiveness", 27. Inst. für Volkswirtschaftstheorie und -politik, WU Vienna University of Economics and Business, Vienna.

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The paper explores the effects of stock markets on business investment. Next to the direct finance effect several indirect channels are identified and discussed. These are the allocation of investment, the effects through balance sheets on the stability of the financial systems, the wealth effect on consumption and corporate governance effects. Among these the intuitively appealing direct effect and the indirect corporate governance effect are discussed most extensively. The empirical evidence regarding the financing effect is clear, if surprising. Stock markets play little role in financing investment and investment reacts little, if at all, to changes in share prices. Changes in corporate governance have gotten prominent recently. The paper proposes a post-Keynesian model thereof and presents evidence that the increase in shareholder power may have reduced investment. (author's abstract)

Item Type: Paper
Additional Information: a revised version of this paper appeared in: Focus on Austria 1/2003: 95-110
Divisions: Departments > Volkswirtschaft
Depositing User: Repository Administrator
Date Deposited: 24 Jun 2003 13:27
Last Modified: 31 Oct 2019 08:02
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