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Because everything is judged on quarterly profitability .....?
Because everything is judged on quarterly profitability numbers, how many publicly traded companies fall victim to short term thinking?
1 Answer
- 1 decade agoFavorite Answer
by definition, shareholder value is measured largely in terms of sustainability-major shareholders are not looking for a quick buck. In that regard, quarterly reports are not a big factor.
however, companys often use short term tactics to boost quarterly sales data-these often involve price discounting which may erode shareholder value in the long run so is ineffective fo this purpose.
to your point, however, CEO compensation is often based on shareholder value, so some will use shorter term tactics (but not quarterly) to inflate share value and get a huge bonus while driving the company into the ground in the long run-sound familiar???