Short-Termism: What You Can Do Tomorrow Will Largely Depend on Your Thinking Today

Abstract

Focus on the short term has been suggested to be causal to the crisis situations during the first part of the 21st century and, specifically, causal to the one we are currently experiencing (Davies, 2010). For example, Dobbin and Jung (2010) suggested that the domination of ‘the quarter’—the quarterly profit report and its accuracy with analysts’ forecasts and projections—had already become the center of CEO focus and attention in the early 1990s. This pressure has lately increased due to amplified uncertainty under crisis, which in turn creates stronger incentives to focus on quarterly results. In this chapter, we unfold the concept of short-termism during crisis and discuss how it affects boards’ decision-making.