How to Foster Long-Term Innovation Investment. Center for American Progress. Neera Tanden and Blair Effron. June 30, 2015.
The U.S. economy is decades into the shareholder value revolution that has swept equities markets and boardrooms alike. Predicated on the idea that maximizing a firm’s share price should be managers’ top priority, this movement holds the promise of making corporations more productive and efficient while making investors wealthier. Yet for all its success in driving wealth and making companies more competitive, there remains an important, unresolved tension in this thesis that is usually glossed over: It does not explain how short-term equity market incentives will necessarily deliver optimal long-term decisions, according to the report. [Note: contains copyrighted material].
[PDF format, 8 pages, 91.03 KB].