Short-term performance pressures: is there a consensus view?

Istemi Demirag

The European Journal of Finance, 1995, vol. 1, issue 1, 41-56

Abstract: The manufacturing sector in the UK has been performing rather badly in comparison with its major international competitors. This deterioration in performance can be seen in R&D spending patenting rates and in market shares and appears to centre on deficiencies in product innovation. There is general agreement that short-termismis one of the main factors responsible for such poor performance in Britain. Does short-termism arise from pressure in captial markets or is it generated within the firm? The stock market is often blamed for putting inappropriate short-term pressures on management by institutional investor intervention and hostile take-over activity leading to changes in management policy and ultimately to dismissal. On the other hand it is also argued that the problem of short-termism originates within management itself. The purpose of this paper is therefore to review the relevant literature surrounding the debate on short-termism to draw conclusions on its likely causes and to provide some suggestions as to how to manage these pressures.

Keywords: short-termism; financial institutions; market efficiency; investment decisions; performance evalution; management control styles (search for similar items in EconPapers)
Date: 1995
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Citations: View citations in EconPapers (9)

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DOI: 10.1080/13518479500000007

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