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Corporate Governance and Short-Termism, An In-depth Analysis of Swedish Data
Stockholm University, Faculty of Law, Department of Law.
2024 (English)In: Nordisk Tidsskrift for Selskabsret, ISSN 1399-140X, Vol. 2, p. 113-135Article in journal (Refereed) Published
Abstract [en]

Corporate Governance and Short-Termism: An In-depth Analysis of Swedish Data The debate concerning sustainable corporate governance is fierce and of great importance to regulators, not the least in the EU. One claim that has been particularly influential in policy making is that the doctrine of shareholder primacy in corporate law and corporate governance leads to short-termism in companies, and that the purpose of the corporation and directors’ duties therefore needs to be changed. In this paper, we challenge the underlying claim by examining potential signs of financial shorttermism related to excessive dividend policies. Studying companies listed on the Swedish stock market, which has one of the largest market capitalizations within the EU and a corporate governance model heavily based on shareholder primacy, our dataset includes 786 unique firms and 7,389 firmyears during the years 2000–2019. Our empirical findings demonstrate that (1) 44 % of companies do not pay out a dividend, (2) the payout ratio of the firms depends on their life cycle, and (3) the firms with the highest dividend payout are also the firms with the highest profitability while at the same time performing well in terms of sustainability reporting and sustainability ratings. Thus we see no material indications of financial short-termism in Sweden. In fact, the four largest dividend payers (which make up 31.4 % of total dividends) are a familyowned global retail company (H&M), a telecom operator where the state is the largest owner (Telia), a bank with strong cooperative roots (Swedbank) and a bank owned to a high degree by its staff (Svenska Handelsbanken). We also contribute with a methodological approach to study short-termism.

Place, publisher, year, edition, pages
2024. Vol. 2, p. 113-135
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Other Legal Research
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Private Law
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URN: urn:nbn:se:su:diva-241003OAI: oai:DiVA.org:su-241003DiVA, id: diva2:1945771
Available from: 2025-03-19 Created: 2025-03-19 Last updated: 2025-05-19Bibliographically approved

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Lidman, Erik

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