Remove Cash Flow Remove Comparison Remove Development Remove Metrics
article thumbnail

Is Corporate Short-Termism Really a Problem? The Jury’s Still Out

Harvard Business

The observation that many “unicorn” companies with no profits — and sometimes no revenues or even fully developed products — get valued so highly makes me skeptical of the idea that the capital market is systematically myopic. McKinsey tries to address this issue by doing comparisons within industries.

article thumbnail

How Incentives for Long-Term Management Backfire

Harvard Business

Why isn’t more of that cash going into developing businesses for long-term gains — the big, outsized gains that come from big bets on the future? The board chose earnings per share (among other financial metrics) to measure and reward executives for long-term performance.