The combination of stock-based CEO compensation and limited informed trading capital creates a ''race to the bottom among firms resulting in myopic project choice. More informative stock prices reduce the agency cost of incentivizing managers. Also, shortening project maturity improves stock price informativeness by catering to informed investors, who prefer short-term assets. However, since informed trading capital is a scarce resource, attracting informed investors cannot increase an individual firm's price informativeness in equilibrium: it simply destroys shareholder value. The ''short-termism trap” can destroy large amounts of shareholder value, potentially up to 100% of the benefits of stock market listing.