Both the citizen and the investor should be concerned about the difficulty modern management finds in taking a long-term view of the growth and development of the business. The public company encounters the blight of quarterly earnings reporting; the private equity owned business must accommodate the timescale of the investors seeking a quick profit. This short termism is reinforced by the incentive schemes offered to managers - even, or perhaps especially, the so-called long-term incentive schemes that now constitute a large part of executive remuneration. Even if you are concerned with the fundamental value in which you hold shares, the managers may not be.
Monday 11 May 2009
Short snippet on short-termism
From John Kay:
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