A project-level analysis of value creation in firms

摘要

This paper analyzes value creation in firms at the project level. We present evidence that managers facing short-termist incentives set a lower threshold for accepting projects. Using novel data on new client and product announcements in both the U.S. and international markets, we find that the market responds less positively to a new project announcement when the firm's managers have incentives to focus on short-term stock price performance. Furthermore, textual analysis of project announcements shows that firms with short-termist chief executive officers use vaguer and generically positive language when introducing new projects to the marketplace.