How to improve the investor-corporate dialogue to make strategic and operating decisions that build value for the long term.
How to improve the investor-corporate dialogue to make strategic and operating decisions that build value for the long term.
Short-term behavior is becoming the norm in modern capital markets. Rather than pursuing and communicating long-term strategies, many public companies dedicate significant resources to meeting quarterly earnings guidance and communicating their performance relative to this guidance. This focus on short-term actions and communications seems counterproductive, considering that more than 50% of a typical company’s value is created by activities that will take place three or more years in the future.
Research shows that the current emphasis on achieving short-term earnings targets leads to value destroying behaviours:
The investor-corporate dialogue can help counteract this short-term bias. We define “investor-corporate dialogue” as the flow of information and ideas between corporations and their current and future investors and have three primary recommendations for companies that seek to strike a better balance between short-term performance and long-term value creation:
Read the paper “Straight talk for the long term” for a brief look at these ideas, and for an extended discussion read ‘Straight talk for the long term: an in-depth look at improving the investor-corporate dialogue
Article
15 July 2024 - On 25 June 2024, FCLTGlobal joined the International Forum of Sovereign Wealth Funds’ (IFSWF) Governance Workshop in London to lead a two-part discussion on avoiding short-term pressures and fostering a long-term investment ecosystem centered on meeting their citizens’ needs.
Climate | Article
3 July 2024 - Over the last several years, it has become clear that investing in climate-related assets in low and middle-income countries is critical to achieving successful decarbonization of the global economy. Given demographic trends and the need...
Press Release
1 July 2024 - FCLTGlobal, a non-profit organization whose mission is to focus capital on the long term to support a sustainable and prosperous economy, announced today that Dr. Raphael Arndt, Chief Executive Officer of Future Fund, and Hein Schumacher, Chief Executive Officer of Unilever, will join its board of directors effective 1 July 2024.