Short-Termism: Good Until It Goes Bad

There are days James Pethokoukis, a scholar at the conservative think tank American Enterprise Institute, isn’t quite sure short-termism is the problem.

“When you talk to companies they feel a lot of shareholder pressure to focus on quarterly returns,” he explains. “A lot of companies would rather not have the pressure, but we don’t want to go back to the sleepy capitalism of the ‘80s when Corporate America got fat and happy.”

If corporations aren’t doing enough long-term investing, he adds, that’s not necessarily the fault of investors.

Every company right now has elements of short-termism, says Blair Jones, managing director of executive compensation consultancy Semler Brossy, adding that organizations need to take short-term steps to get to the long term. “The worry is when you’re so focused on delivering short-term results you either take the eye off the ball on some things like quality, or ethical behavior, because you’re just so focused on delivering results.”

Read the rest of the article by Eve Tahmincioglu, featuring Blair Jones, at Directors & Boards.