Counter Evidence on Managements' Investment Myopia

Hayes Robert H. Garvin David A. , “Managing as if Tomorrow Mattered,” Harvard Business Review, 60 (3) (May/June 1982): 71.

Ibid., p. 71.

“Will Money Managers Wreck the Economy?” Business Week, August 13, 1984, p. 86.

This is survey evidence. See: Istvan Donald F. , “The Economic Evaluation of Capital Expenditures,” The Journal of Business (January 1961), p. 45; Pflomn Norman P. , “Managing Capital Expenditures,” Studies in Business Policy, 107 (New York, NY: The National Industrial Conference Board, 1963); Christy George A. , Capital Budgeting–Current Practices and Their Efficiency (Eugene, OR: Bureau of Business & Economic Research, University of Oregon, 1966); Klammer Thomas P. , “Empirical Evidence of the Adoption of Sophisticated Capital Budgeting Techniques,” Journal of Business (July 1972), p. 387; Brigham Eugene F. Pettway Richard H. , “Capital Budgeting by Utilities,” Financial Management (Autumn 1973), p. 11; Brigham Eugene R. , “Hurdle Roles for Screening Capital Expenditure Proposals,” Financial Management (Autumn 1975), p. 17; Scholl Lawrence D. Sundem Gary F. Geijbeck William R. Jr. , “Survey and Analysis of Capital Budgeting Methods,” Journal of Finance (March 1978), p. 281. With the exception of the 1973 paper by Brigham and Pettway, all of the studies primarily concentrated on large manufacturing firms.

Rebello Kathy , “U.S.A.'s Factories Gain,” U.S.A. Today, September 20, 1984, p. 1B.

Data on new issues taken from Drexel Burnham Lambert, Public Offerings of Corporate Securities 1983.

The sample consisted of the first and last issue of each month in 1983, except when the company had a negative net worth, in which case an adjacent issue was selected.

Tinic Seha M. West Richard R. , Investing in Securities: An Efficient Market Approach (Reading, MA: Addison-Wesley Publishing Co., 1979).

New York Stock Exchange, U.S. International Competitiveness: Perception and Reality, August 1984. The study is not a “puff piece.” Clopper Almon of the University of Maryland contributed much to it. Results rely heavily on data from that university's Inforum Inter-industry Model and Research Project.

For an elaboration of the “Industrial Policy view,” see, for instance, Magaziner Ira C. Reich Robert , Minding America's Business (New York, NY: Harcourt Brace Jovanovich, 1982).

Malkiel Burton G. , “The Capital Formation Problem of the United States,” Journal of Finance (May 1979), p. 297. Malkiel points out that similar arguments have been made by Greenspan Alan , “Investment Risk: The New Dimension of Policy,” The Economist, August 6, 1977, p. 31.