Fostering long-term value creation

There is widespread concern that corporations and their investors are focusing on short-term perspectives and objectives at the expense of longer-term considerations.

Curbing excessive short-termism
Global Network of Director Institutes, May 2014

There is widespread concern that corporations and their investors are focusing on short-term perspectives and objectives at the expense of longer-term considerations.

A May 2014 publication by the Global Network of Director Institutes, “Curbing excessive short-termism”, lists practices that boards of public companies can adopt to help foster longer-term value creation and curb excessive short-termism. These practices relate to the timeframe of company goals and strategies; the nature of engagement, communication and reporting practices; and the structure of executive remuneration.

Long-term investing gaining momentum

There is some recent evidence that long-term investing is gaining momentum. This is likely to reflect, in part, the growth in superannuation/pension funds that tend to have relatively long-term investment horizons.

A study by Nasdaq OMX of more than 8,000 investors worldwide indicates that investor turnover has been consistently decreasing since the financial crisis. In an article referring to the study, "Long-term investing is gaining momentum", Miguel Santisteve, Associate Director of Advisory Services at Nasdaq OMX, refers to a “new investor mindset”. He observes that there is an unprecedented opportunity for businesses to refocus their strategy; for example, shifting their attention to long-term innovation targets, improving operational efficiency, and lessening their overall environmental impact.