Short-termism: another blast from the past

Not surprisingly, we have quite a few books kicking around at work about governance and related issues. I really ought to have a proper hunt through these before my regular Amazon splurges, as sometimes we already have copies of things I want to read.

A good example is Short-Termism On Trial by Paul Marsh, which I now have two copies of at home, having ordered one before realising that we have a work copy. It is worth a read as it represents a fairly comprehensive stab at this regularly re-occuring criticism of the company-shareholder relationship in markets like the US and UK. It makes a pretty good case that actually a lot of the criticisms voiced don't have much evidence to back them up. And it argues that if there is a problem then it is companies, rather than investors, that are at fault. I'm not entirely convinced, but I can't think of a comparably well-researched case for the prosecution.

It's also worth a read just to remind yourself that there is nothing much new in the current debate about ownership. Just a few excerpts as examples that not much has changed:

Amongst the favourite suggestions are disenfranchising shareholders who have held their shares for less than, say, a year...

A recurring theme in the current UK debate (!) is that the problems of short-termism, whether they be perceptions or reality, would be greatly ameliorated if shareholders acted more like "owners".

[E]ven in an ideal world of excellent communications and dialogue between companies and institutions, it would still be very difficult for fund managers to have the detailed knowledge required to intervene successfully in a firm's affairs.