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

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  • Istemi Demirag

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.

Suggested Citation

  • Istemi Demirag, 1995. "Short-term performance pressures: is there a consensus view?," The European Journal of Finance, Taylor & Francis Journals, vol. 1(1), pages 41-56.
    • Handle: RePEc:taf:eurjfi:v:1:y:1995:i:1:p:41-56
    DOI: 10.1080/13518479500000007
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    References listed on IDEAS

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    1. Nickell, Stephen & Wadhwani, Sushil B, 1987. "Myopia, the 'Dividend Puzzle', and Share Prices," CEPR Discussion Papers 155, C.E.P.R. Discussion Papers.
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    Cited by:

    1. Groot, Tom L. C. M., 1997. "The influence of financial markets and corporate governance on R&D policy of Dutch companies," Serie Research Memoranda 0047, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    2. Olivier Brossard & Stéphanie Lavigne & Mustafa Erdem Sakinç, 2013. "Ownership structures and R&D in Europe: the good institutional investors, the bad and ugly impatient shareholders," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 22(4), pages 1031-1068, August.
    3. Alexander Gümbel, 2005. "Trading on Short-Term Information," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 161(3), pages 428-452, September.
    4. Robert Rieg, 2015. "Dynamics of value-based management: does shareholder value cause short-termism?," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 26(2), pages 193-224, August.
    5. Kosheek Sewchurran & Johan Dekker & Jennifer McDonogh, 2019. "Experiences of Embedding Long-Term Thinking in an Environment of Short-Termism and Sub-par Business Performance: Investing in Intangibles for Sustainable Growth," Journal of Business Ethics, Springer, vol. 157(4), pages 997-1041, July.
    6. Gérard Charreaux & Philippe Desbrières, 1998. "Gouvernance des entreprises:valeur partenariale contre valeur actionnariale," Revue Finance Contrôle Stratégie, revues.org, vol. 1(2), pages 57-88, June.
    7. Gérard Charreaux & Philippe Desbrières, 2001. "Corporate Governance: Stakeholder Value Versus Shareholder Value," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 5(2), pages 107-128, June.
    8. Alexander Gümbel, 2005. "Should short-term speculators be taxed, or subsidised?," Annals of Finance, Springer, vol. 1(3), pages 327-348, August.

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