The McKinsey Global Institute, in conjunction with FCLT Global, recently released research stating that long-term-oriented companies perform better than those that focus on short-term results. While a laudable effort in principle, measuring a company’s tendency to make myopic operating and investing decisions is fiendishly complex. Getting the measurement right is central to providing convincing evidence on the debate over short-termism.
We Can’t Study Short-Termism Without the Right Metrics
Here are five to start with.
April 05, 2017
Summary.
The McKinsey Global Institute, in conjunction with FCLT Global, recently released impactful research stating that long-term-oriented companies perform better than those that focus on short-term results. While a laudable effort in principle, measuring a company’s tendency to make myopic operating and investing decisions is fiendishly complex. Getting the measurement right is central to providing convincing evidence on the debate over short-termism. The author explains why McKinsey’s measures can be problematic, and then offers five alternative measures that may be more likely to measure a company’s myopic orientation.
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