Menu Close

How to reduce short-termism and revive growth


Warning: join(): Invalid arguments passed in /home/ninastib/sites/leadershipreview.net/wp-content/themes/customify/inc/blog/class-post-entry.php on line 252
Paul Neagu

There’s a growing argument that short-termism – concentrating on boosting current profits rather than investing in the long-term future – is quashing innovation and creating misleading market figures, writes Anne Marie Knott for Harvard Business Review.

Although stock-market indexes suggested a major rise last year, quarterly profits didn’t match up, she writes. Standard & Poor’s 500 and the Dow, for example, shot up in 2017 by 18 and 19% respectively. Quarterly profits, however, increased by just 5% since 2012.

“But investors’ valuations of those profits (as measured by earnings per share) has increased 59% over the same period.” Some experts suggest that this anomaly is the result of many years of short-sighted focus that has left businesses hollowed out and struggling and that it’s now time to reverse the trend.

Please log in or take a free two month subscription to continue reading
Credits:
Source Article: The Real Reasons Companies Are So Focused On The Short Term
Author(s): Anne Marie Knott