Are U.S. Companies Too Short-Term Oriented? Some Thoughts
U.S. companies are often criticized for being overly short-term oriented. This paper documents that those criticisms have a long history, going back at least thirty-five years. The paper then considers the implications of sustained short-termism for corporate profits, venture capital investments and returns, private equity investments and returns, and corporate valuations. The paper finds little long-term evidence that is consistent with the predictions of the short-term critics.
Thanks to Josh Lerner, Yasin Ozcan and Scott Stern and participants at the NBER's Innovation Policy and the Economy Conference for helpful comments. And thanks to the Fama-Miller Center at Chicago Booth for financial support. Kaplan has sat on the boards of several U.S. companies and one U.S. mutual fund. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.
Steven N. Kaplan, 2018. "Are U.S. Companies Too Short‐Term Oriented? Some Thoughts," Journal of Applied Corporate Finance, Morgan Stanley, vol. 30(4), pages 8-18, December. citation courtesy of