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The Origins And Costs Of Short-Term Management, Kent Greenfield

Kent Greenfield

Why is a fixation on the short term a problem for American businesses? One might hasten to answer that management is compensated for short-term successes. Another answer might be that some investors—particularly professional investors—value only the short term and manipulate the market in a particular stock so they can profit on the movement. These answers undoubtedly are part of the answer. But a puzzle remains: why does the market not punish such short-termism? This essay will present a possible answer.