Who Cares About the Future? Short- and Long-Term Performance Measures and Their Impact on Firm Success

47 Pages Posted: 18 Feb 2021

See all articles by Mariana Sailer

Mariana Sailer

Vienna University of Economics and Business

Date Written: February 12, 2021

Abstract

Finding an incentive system that optimally controls managerial effort and improves firm performance is an evergreen issue in both research and practice. Corporate governance recommendations and practical implementations aim at preventing short termism and promoting broad yet individual effort assessment. Nevertheless, their benefits are less clear and might reverse in reality. This paper presents comprehensive evidence for the interference of short- and long-term performance measures based on panel data from German public companies’ remuneration reports. The findings show that short-term orientation is not necessarily harmful, but individually negotiated goals can encourage managerial selfishness to the detriment of the firm.

Keywords: corporate governance; performance measurement; time horizons; individual performance measures

JEL Classification: M49

Suggested Citation

Sailer, Mariana, Who Cares About the Future? Short- and Long-Term Performance Measures and Their Impact on Firm Success (February 12, 2021). Available at SSRN: https://ssrn.com/abstract=3784618 or http://dx.doi.org/10.2139/ssrn.3784618

Mariana Sailer (Contact Author)

Vienna University of Economics and Business ( email )

Welthandelsplatz 1
Vienna, Wien 1020
Austria

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