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Why CEOs Should Share Their Long-Term Plans with Investors

By: Christina Rehnberg, George Serafeim and Brian Tomlinson
  • Format:Electronic
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Abstract

Rather than requiring less short-term information, the key to combating short-termism is to encourage companies to share more information about their long-term plans. Analysis of companies that have done so suggests that long-term plans are not mere marketing presentations or “cheap talk.” Larger capital market reactions for both stock prices and trading volumes during the course of the event suggest that the information presented during the event is new and value-relevant for investors. As such, the long-term plan can be a valuable addition to the investor relations tool kit to enable CEOs to effectively communicate with long-term investors.

Keywords

CEO; Investor Relations; Disclosure; Long-term Growth; Investing; Business and Shareholder Relations; Strategy; Corporate Disclosure

Citation

Rehnberg, Christina, George Serafeim, and Brian Tomlinson. "Why CEOs Should Share Their Long-Term Plans with Investors." Harvard Business Review (website) (September 19, 2018).
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About The Author

George Serafeim

Accounting and Management
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More from the Authors
  • Vytal: Packaging-as-a-Service By: George Serafeim, Michael W. Toffel and Stacy Straaberg
  • Northvolt: Building Batteries to Fight Climate Change (B) By: George Serafeim, Debora L. Spar, Peter Tufano, Hugo Etchegoyhen and Emilie Billaud
  • Climate Solutions, Transition Risk, and Stock Returns By: Shirley Lu, Edward J. Riedl, Simon Xu and George Serafeim
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