Taking Short-Termism Seriously

We disagree that we should resign ourselves to short-termism as the “unalterable bottom line.” After three decades of turbulence in the corporate governance arena, we believe we are nearing an inflection point, as an increasing number of investors, stakeholders, academics, advisors, politicians and policymakers are recognizing the far-reaching and damaging effects of short-termism. Short-termism and activism are significant contributors to diminished GDP and to economic decline. They reflect a systematic failure to harness and cultivate the value of human capital and strategic investments, and they accelerate social inequality and concomitant political tensions. To the extent that individual money managers are biased towards the short term for self-interested reasons, notwithstanding the damage to the long-term economy as a whole, this is all the more reason to bring attention to the problem and combat it.