Resources
We conduct original research on the causes of short-term business decisions and work to find practical solutions.
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.
Risk and Resilience | Report
21 December 2018 - Boards and executives of long-term funds, such as pension plans, sovereign wealth funds, and endowments, have a challenging problem. They need to manage those portfolios to meet their long-term purpose, which may be decades or more into the future. Yet no fund has the luxury of looking only to that long-term time horizon. Each must also meet expectations in the near term in order to continue in its role and with its investment strategy.
Report
6 December 2018 - Two years ago, FCLTGlobal was established with a fundamental belief that long-term investing makes the world better for us all. Companies and their investors benefit by focusing on the long term, to be sure, but more important is that this long-term focus benefits their communities: the people whose savings investors manage and the many stakeholders a company serves. We began as the Focusing Capital on the Long Term initiative, led by a small and passionate group of business and investment leaders who saw clearly the harm...
Report
29 March 2018 - We very much appreciate the time and energy of all those who made this a highly productive day devoted to discussing practical actions to encourage long-term business and investment decisions. We were encouraged that leaders from five continents gathered to engage in this important work, and we are particularly grateful to our 42 Founder and Member organizations, our board of directors, and our strategic advisors who all played a role in making this important event a success. While it is impossible to capture all the energy...
Investor-Corporate Engagement, 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...
Report
8 February 2017 - Based on an analysis of over 600 large and mid-cap U.S. publicly listed companies from 2001 to 2015, this paper provides systematic evidence that a long-term approach can lead to superior performance for revenue and earnings, investment, market capitalization, and job creation.
Report
28 September 2016 - Discussions of corporate short-termism are often a microcosm of the issue itself. On the short view—say, 2009 to the present—things are looking up. CEO tenures, the average holding period for S&P 500 shares, and the average duration of corporate bonds are all up. If one takes a longer view, however, the picture begins to darken. By some measures, U.S. business investment in fixed assets is at an all-time low, while the share of net income S&P 500 companies spend on buybacks is at an all-time...
Governance | Report
5 June 2015 - Canadian directors believe they have a responsibility to address short‐termism. Many believe there are specific actions they should be taking on their respective boards. Such are the results of a recent survey of the members of the Institute of Corporate Directors (ICD). In June 2015, Dominic Barton and Mark Wiseman, Global Managing Director of McKinsey and President and CEO of Canada Pension Plan Investment Board (CPPIB) respectively, delivered a well‐received keynote address based on the findings of their HBR article Where Boards Fall Short. The address...
Report
23 March 2015 - In a recent survey of public and private pension plans and sovereign-wealth fund managers, respondents overwhelmingly agreed that while the ability to invest long term is an advantage, they do not necessarily have an effective set of implementation strategies/tools to help them realize their aspirations to be long term.
Investor-Corporate Engagement | Report
16 March 2015 - Short-term behavior is becoming the norm in modern capital markets. Rather than pursuing and communicating long-term strategies, many public companies dedicate significant resources to meeting quarterly earnings guidance and communicating their performance relative to this guidance. This focus on short-term actions and communications seems counterproductive, considering that more than 50% of a typical company’s value is created by activities that will take place three or more years in the future. Research shows that the current emphasis on achieving short-term earnings targets leads to value destroying behaviours: One...
Report
10 March 2015 - Insights from FCLT's Long-Term Value Summit, where more than 120 senior global leaders from all parts of the investment value chain, including asset owners, asset managers, corporate boards and management, met in New York in March 2015.
Report
1 March 2015 - Asset owners, asset managers, corporate directors, and managers have the ability to unlock system-wide change, yet today too many of these individuals are the source of short-term pressure. An ideal market will always include a mix of investors with different investment time horizons and investment strategies. Time horizons will always vary by industry and asset type. Yet, across industries, long-term thinking goes beyond a product cycle, beyond the average tenure of directors or the CEO, and beyond a typical investment cycle. If the major players...