Testing for Short Termism in the UK Stock Market
A Comment
Bibliographic Data
| ID | 9702971 |
|---|---|
| Authors | Stephen Satchell (0000-0002-5258-762X), S E Satchell, D C Damant, David Damant |
| Year | 1995 |
| Volume | 105 |
| Issue | 432 |
| Pages | 1218 |
| Publication date | 1995-09-01 |
| Open Access | No |
| Type | ARTICLE |
| Venue | The Economic Journal (JOURNAL) |
| Journal identifiers | ISSN: 0013-0133 • E-ISSN: 1468-0297 |
| Publisher | Oxford University Press (OUP) (PUBLISHER) |
| DOI | 10.2307/2235413 |
| OpenAlex | W1990125379 |
| Language | EN |
| References cited | 1 |
In the November I 993 issue of thisJOURNAL, David Miles estimates, and tests for, the presence of short-termism in the United Kingdom using data from I980 to I988 based on a sample of 477 non-financial firms. He modestly declines to claim that he has detected the presence of shorttermism but concludes that: 'those who believe it does not exist do need to explain something about the operation of security markets which makes longerterm cash flow appear to be discounted at much higher rates than shorter-term flows.' The purpose of this note is to provide a model which gives such an explanation; we shall also show that such a model is consistent with the empirical realities of the early i980s. J We believe that the Miles paper has two serious defects. The first is the assumption that the risk premia per unit time varies across firms but is constant through time: over/under discounting is then detected relative to this base. To quote Miles
Biology · Business · Economics · Financial economics · Financial system · Monetary economics · Stock (firearms · Stock market · Engineering · Financial Markets and Investment Strategies · Housing Market and Economics · Monetary Policy and Economic Impact
| Highly cited | No |
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