Friday, 10 September 2010

Patience, finance and corporate governance

Andrew Haldane, an executive director at the Bank of England, yesterday delivered a paper titled "Patience and Finance" at the Oxford China Business Forum in Beijing: see here (pdf). One argument advanced by Mr Haldane is that the "public good of information and liquidity may unleash the public bad of myopia and volatility". He provides examples of "impatience" and one of particular relevance for corporate governance policy stands out given the pivotal role ascribed to shareholders: the secular fall over the past 40 years in the average duration for which listed company shares are held. In the US and UK, the average duration is now less than a year. It was around 7 years in the US in 1940 and in the UK in the mid 1960s it was around 5 years.

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