;#Faculty News;# | Strategy + Business | 01
How a Short-Term Strategy Can Backfire
Re: Francois Brochet & Georgios Serafeim
Analysis of conference calls with investors has shed new light on firms that explicitly try to maximize near-term earnings and stock prices — an approach known as "short-termism." According to this paper, these firms face greater risks, including a higher cost of capital and a lower return on assets, than companies that focus on creating long-term value.