Here’s a conundrum: On the one hand, there’s a consensus among thoughtful business leaders that too many companies are sacrificing long-term growth on the altar of smooth, reliable short-term earnings. On the other hand, most large sample studies in the accounting literature show something different: firms that manage their earnings perform better than firms that don’t (and not just in the short term).
A Partial Defense of Our Obsession with Short-Term Earnings
It doesn’t always hurt the long term.
May 07, 2015