September 18, 2015

Hillary Clinton has once again thrust the debate over the dangers of shareholder activism and short-term thinking in financial markets into the national spotlight. As part of her bid to win the presidency, she proposed a number of measures to address what she calls “quarterly capitalism,” a short-term perspective in the markets which she says reduces investment in R&D and productivity measures and hinders long-term growth. In particular, she questioned the role of “hit-and-run” activist investors who press companies to increase their dividends and share buybacks, and said she would call for a full review of regulations over shareholder activism.

“Large public companies now return eight or nine out of every 10 dollars they earn directly back to shareholders, either in the form of dividends or stock buybacks, which can temporarily boost share prices,” she said in a campaign speech at NYU. “Last year, the total reached a record $900 billion. That doesn’t leave much money to build a new factory or a research lab, or to train workers, or to give them a raise.”

With that, Clinton, joined a chorus of high-profile figures who have called into question how companies should use their capital.

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