Many people have suggested moving away from quarterly earnings reporting as a way to reduce short-termism. But such a change would probably not change how resources are allocated or businesses operate. Rather than requiring less short-term information, we believe the key to combating short-termism is to encourage companies to share more information about their long-term plans.
Why CEOs Should Share Their Long-Term Plans with Investors
Investors will be patient if you give them a reason to be.
September 19, 2018
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Summary.
Rather than requiring less short-term information, the key to combating short-termism is to encourage companies to share more information about their long-term plans. Analysis of companies that have done so suggests that long-term plans are not mere marketing presentations or “cheap talk.” Larger capital market reactions for both stock prices and trading volumes during the course of the event suggests that the information presented during the event is new and value-relevant for investors. As such, the long-term plan can be a valuable addition to the investor relations tool kit to enable CEOs to effectively communicate with long-term investors.