Overview

short-termism


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Any policy that aims to maximize current profits rather than long-term development and wealth. For example, cutting back on research and development reduces immediate costs but may lead to products becoming obsolescent in the future. A company may well experience problems of this kind if managers' salaries or bonuses are linked too closely to short-term results. Similarly, institutional and individual shareholders often overreact to a company's short-term results and policies, causing the company to lose the longer-term focus that is ultimately in the interests of all stakeholders.

Subjects: Business and Management.


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