The Securities and Exchange Commission Division of Corporation
Finance recently hosted a roundtable to discuss short-termism in capital
markets – the phenomenon where companies and investors focus
on short-term results rather than having a long-term view.
Unsurprisingly, opinions were varied about whether short-termism is
a problem and whether it can be addressed through
regulation.
Quarterly Guidance
A robust discussion took place regarding the issue of quarterly
guidance. Although quarterly guidance has never been required, many
companies feel compelled to issue guidance because of competitive
or investor pressures. Research suggests that companies that issue
quarterly guidance have shorter-term strategies designed to meet
quarter-end metrics, which may have economic consequences in the
long-run. Some argue that companies that issue quarterly guidance
may focus less on R&D and capital expenditures than those that
don't provide such guidance. According to a
