Saving Capitalism From Short-Termism
by Alfred Rappaport | August 11, 2011 | Business & Money
Business leaders today obsess over quarterly earnings and the current stock price―and for good reason. Corporate incentives typically focus on short-term profits rather than long-term value creation. Nothing is more harmful to businesses―and to the broader economy.
Few business thinkers in recent decades have contributed more to this subject than Alfred Rappaport. As an author and educator, Rappaport is...
Business leaders today obsess over quarterly earnings and the current stock price―and for good reason. Corporate incentives typically focus on short-term profits rather than long-term value creation. Nothing is more harmful to businesses―and to the broader economy.
Few business thinkers in recent decades have contributed more to this subject than Alfred Rappaport. As an author and educator, Rappaport is a pioneer in developing the principles of values-based management and is an acknowledged authority on how to make long-term shareholder value the essential driver of corporate strategy. His latest work, Saving Capitalism from Short-Termism, is a clarion call for conquering the addiction to short-term profit―and getting on the path to building long-term value.
Rappaport’s solution to short-termism is simple but profound: business leaders must align the interests of corporate and investment managers with those of their shareholders and beneficiaries. His plan includes:
- Gaining the commitment of senior management and the board to long-term value creation as their governing objective
- Incentives that reward CEOs, operating-unit managers, and front-line employees for delivering superior long-term value
- A major overhaul of corporate financial reporting that provides more relevant and transparent information to investors and other financial statement users
- Performance fees that align the interests of investment managers and shareholders
- Actively managed funds with concentrated holdings and long investment horizons that tilt the odds in favor of better long-term shareholder returns
If corporate and investment leaders do not address the problem of short-termism, more financial crises may be in store―and they are likely to be more severe and broader than the meltdown in 2008.
The trade-off is clear: We can continue to pursue short-term profit at the expense of economic vitality, individual financial security, and perhaps even the dominance of the free-market system itself. Or we can take the responsible path outlined in this book and generate innovation, quality, growth, and value over the long term.
More details for Saving Capitalism From Short-Termism
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ISBN #
0071736360
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Page count
256 pages
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Publication Date
August 11, 2011
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Publisher
McGraw-Hill Education
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Category
Non-Fiction
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Genre
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Amazon Star Rating
4.3
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Amazon Ratings Count
23 ratings
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Amazon Last Rating Data Date
September 30, 2021
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