How to Curb Short-Termism in Corporate America

Although some criticisms of corporate short-termism are warranted, others are exaggerated. Institutional investors—the dominant holder of publicly traded stock—have supported long-term plans of companies with good track records. Nevertheless, certain reforms are needed to curb short-termism, such as shorter filing periods for 13D notices and limits on empty voting. Most importantly, corporate officials can reduce the focus on short-term results by ending their public projections of quarterly earnings and extending the time horizon of executive compensation.