“Project Syndicate, a syndicate of primarily economists who write for the international business press, such as Les Echos and Il Sole 24 Ore in Europe, distributed a series of columns I wrote on how best to think about stock market short-termism. It’s a subject I’ve been interested in for some time, and with which over time I’ve discussed specifics with several of you, particularly Martin Bengtzen and Federico Raffaele.
In the first column, which can be found here , “Corporate Short-Termism in the Fiscal Cliff’s Shadow,” I looked at how we should think about short-termism in light of government policy instability, such as the American fiscal cliff and Euro stability. In the second, “Are Stock Markets Really Becoming More Short Term?”, I examined whether the consensus that financial markets are becoming increasingly short-term is correct; much of the supporting data comes from averaging in a fringe of rapid program trading, while core shareholders in the United States, like Fidelity Investments and Vanguard, have actually increased their holding duration during recent decades. In the third, “Apple’s Cash-Flow Problem,” I looked at whether the criticism of investors seeking to have Apple let go of its $137 billion cash hoard are really as short-term focused as the critics have it.
The posts draw from a longer article, “Corporate Short-Termism—In the Boardroom and in the Courtroom,” which is scheduled to be published by Business Lawyer this August, and which is available as a manuscript here.”
— Anastasia Tolu, Corporate Governance site administrator
May 3, 2012