Investor-Corporate Engagement | Article
11 April 2019 - When considering going public, private companies often express concern about the perceived short-term fixation of public markets. In response, some choose to stay out of the public markets – to the detriment of our overall economic health. But other companies address this concern by issuing multiple classes of shares, each with different voting rights. Common practice is to assign more voting rights to one class of stock than the other, with the superior voting rights going to founders or other insiders. Issuing companies say that they take...
Investor-Corporate Engagement, Quarterly Earnings Guidance | Article
5 April 2019 - Research has consistently found that the vast majority of corporate executives think that short-term pressure is changing their business decisions and harming long-term value. Recent work from FCLTGlobal has shown that an effective way to combat this phenomenon is by moving away from quarterly guidance. After calls from the White House and American business leaders in the latter half of 2018 to reexamine the standards for corporate guidance and reporting in American business, the U.S. Securities and Exchange Commission has requested public comment on how to enhance the investor protection attributes of periodic disclosures...
Investor-Corporate Engagement | Report
21 February 2019 - Roadmaps have a proven record at leading companies, and evidence suggests that the majority of investors (especially long-term investors) prefer this approach. By focusing on key elements of performance such as competitive advantages, long-term objectives, and a strategic plan matched with clear capital allocation priorities, companies can build buy-in among long-term investors who support a focus on long-term value creation. Survey after survey indicates that investors prefer forward-looking, long-term guidance around a company’s strategy and expected performance. This paper, which represents the collective effort and experience...
Investor-Corporate Engagement | Toolkit
21 February 2019 - Long-term investors are increasingly looking beyond quarterly results to understand how companies plan to create durable value over time.
Investor-Corporate Engagement, Metrics | Toolkit
1 February 2019 - This toolkit outlines practical steps public companies can take to manage short-term market pressures while maintaining a long-term strategic focus. From cultivating long-term shareholders and strengthening board engagement to aligning incentives with sustained value creation, it offers actionable approaches for thriving as a public company with a long-term mindset.
Investor-Corporate Engagement | Report
1 February 2019 - By some accounts, public markets are out of fashion. Detractors point to the decline of IPOs in developed economies and the growth of private capital pools over the last few years. But these trends tell only one side of the story. Private markets are doing well, but their success does not suggest the decline of public markets.
Quarterly Earnings Guidance, Investor-Corporate Engagement | Toolkit
25 October 2018 - We are exploring the most effective ways for corporations to communicate their long-term plan and prospects to the investment community. Investors are among a company’s most valued stakeholders and the primary audience for forward looking statements so we want to know what you consider important information when evaluating a company’s long-term prospects.
Investor-Corporate Engagement, Quarterly Earnings Guidance | Article
9 October 2018 - A version of this post was first published on Harvard Law School Forum for Corporate Governance and Financial Regulation. Thank you to our Member organizations who contributed to the writing of this article. By now, most business-watchers have seen the president’s tweet asking the Securities and Exchange Commission (SEC) to study the requirement that US public companies release earnings quarterly. With this message, President Trump has focused attention on the short-term mentality that too often characterizes American business. The tweet, which followed his discussion with Pepsi CEO Indra Nooyi about...
Investor-Corporate Engagement | Article, Toolkit
24 April 2018 - Let’s start with the facts: it is critical to be clear about what we know and what we do not. Harvard Business School Dean Nitin Nohria and Harvard Business School Professor George Serafeim started 2018 Focusing Capital on the Long Term Summit by administering a quiz on many facets of long-term investing to dispel misconceptions and provide participants with foundational knowledge to apply for the rest of the day. This questionnaire, created by Serafeim and Nohria, explores the incentives, institutions, and behaviors that give rise to short-termism....
Investor-Corporate Engagement | Article
13 April 2018 - Spring is in the air, baseball has begun here at FCLTGlobal headquarters in Boston, and the public company earnings reporting season is upon us – thus begins that familiar, yet often tedious, quarterly dance done by companies and the analysts that cover them. The quarterly earnings call looms large on most corporate calendars, regularly consuming significant amounts of time to prepare, but are investors and companies making the best use of this venue for regular interaction? Many of the most commonly asked questions on earnings conference...
Investor-Corporate Engagement | Press Release
24 October 2017 - Boston, MA, October 24, 2017– FCLTGlobal, a not-for-profit organization that works to encourage a longer-term focus in business and investment decision-making, today published a report, Moving Beyond Quarterly Guidance: A Relic of the Past, calling into question the need for quarterly guidance to shareholders and investors. The report debunks long-held industry misconceptions about the importance of short-term earnings guidance, and argues that companies and investors should move away from this practice. Key findings from the report show: Providing quarterly forward earnings guidance (as distinct from quarterly reporting) is increasingly on a downward...
Investor-Corporate Engagement, Quarterly Earnings Guidance | Report
23 October 2017 - Since 2005, research has consistently found that the vast majority of corporate executives think that short-term pressure is growing, that it is changing their business decisions, and that those changes are destroying value. One effective way that corporations are combating this phenomenon is by moving away from quarterly earnings per share (EPS) guidance and instead providing investors with a long-term road map focused on the fundamental economic drivers of the business tied to management’s outlook on critical key performance indicators (KPIs). As we highlighted in our...