The Modern Shareholder: How a Short-Term Focus is Harming U.S. Corporations

The individuals and organizations who own shares in corporations have changed radically over the past 50 years. Today the household sector holds few direct shares in corporate equities - and a significant majority of stocks are owned by institutional investors, including mutual funds, pension and retirement funds, life insurance companies, and foreign entities. It is estimated that nearly 70 percent of American stock-trading arises from companies using high-frequency trading strategies that emphasize holding stocks for very short periods of time. As a result, many current shareholders lack a long-term time horizon and prefer short-term results. This new reality makes it difficult for corporate executives to pursue strategies based on long-term welfare and growth of a company.

On June 1, the Governance Studies program at Brookings will host a forum focused on the social, economic and political ramifications of the changed nature of corporate shareholders. A panel of experts will explore how the short-term focus of shareholders and investors affects corporate behavior and government policy, how to encourage longer time horizons among shareholders and executives, and how the financialization of America's corporations is affecting long-term development.

The event will be webcast. Participants can join the conversation on Twitter at hashtag #BILTD. After the program, speakers will take audience questions.