Dual Pathway for Short-Termism Reform
This chapter analyzes if the reforms identified in Chapter 4 solve the SMST issue. Based on the analysis in the previous chapters, this chapter presents a dual pathway for reform. This dual pathway provides that an effective remedy to the short-termism problem involves either: (1) minimizing the excessive discounting of future returns; or (2) cutting off the transmission mechanisms of short-termism. Option (2) requires ‘hard’ law reform, and Option (1) is a ‘lighter’ touch. Few of the reforms set out in Chapter 4 address the short-termism issue, and the ones that do proceed via Option (1). Given the inherent difficulty in effectively regulating to correct short-termism, it is not surprising that the few implemented reforms to date have been minimal and relatively ‘light’ touch. This chapter concludes that reform efforts should continue to be ‘light’ touch but should focus on reforms following Option (1) of the dual pathway.
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