Uncertainty, externalities and collective action problems: correcting the short-term bias through a multi-stakeholder approach

Francesco Denozza (Università di Milano)
Alessandra Stabilini (Università di Milano)


In this paper, we examine the extent to which changes in the rules of corporate governance, imposed by law, might allow greater weight to be given, in the decision making of actors in financial markets, to longer term objectives such as the protection of the environment and inequalities in the distribution of wealth. We believe that the relevance of, and the growing concern with, short-termism in contemporary financial markets is due to certain identifiable factors, that we explore and discuss. Our thesis is that the involvement of a wider range of stakeholders in the decision-making of financial market actors (including professional investors and investee companies) can mitigate the negative effects of these factors.

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