Are U.S. Companies Too Short-Term Oriented? Some Thoughts

Abstract

U.S. companies are often criticized for being overly short-term oriented. This paper documents that those criticisms have a long history, going back at least thirty-five years. The paper then considers the implications of sustained short-termism for corporate profits, venture capital investments and returns, private equity investments and returns, and corporate valuations. The paper finds little long-term evidence that is consistent with the predictions of the short-term critics.

Keywords: Short-Termism, Investment, Innovation

JEL Classification: D24, G31, L25