Saving Capitalism From Short-Termism: How to Build Long-Term Value and Take Back Our Financial Future
McGraw Hill Professional, Jul 21, 2011 - Business & Economics - 256 pages
PRAISE FOR SAVING CAPITALISM FROM SHORT TERMISM
“As Rappaport keeps on speaking out for the realities surrounding investment and speculation, our society will profit as it builds on his keen insights.”
“Al Rappaport brings insight and wisdom to the short-termism debate, fully demonstrating the way perverse incentives are undermining public companies and capital markets.”
"In this rigorous, useful, and delightful book, Rappaport undresses short-term financial incentives for what they are: parasites that draw the value-creating innovation out of companies. And he shows how executives can align long-term value-creating investments with the right investors' expectations."
“How to make managers focus on the long-run is one of the most consequential and difficult questions in corporate governance and is the subject of much debate and disagreement. Professor Alfred Rappaport’s insightful book is a valuable contribution to this important debate.”
“Saving Capitalism from Short-Termism insightfully exposes the contradictions by which we incentivize money managers to require short-term focus by company managers. Again and again in rereading this book, I am struck with the author’s felicitous style in raising subject after subject in which I have long been interested—but, until this read, have not been able to resolve. Buy it, read it, and enjoy.”
“Capitalism fails when corporate managers and professional investors prefer their own interests to those the true owners of businesses. In Saving Capitalism from Short-Termism, Al Rappaport shows how new incentives schemes can deliver shareholder value for the 21st century.”
About the Book
Business leaders today obsess over quarterly earnings and the current stock price—and for good reason. Corporate incentives typically focus on short-term profits rather than long-term value creation. Nothing is more harmful to businesses—and to the broader economy.
Few business thinkers in recent decades have contributed more to this subject than Alfred Rappaport. As an author and educator, Rappaport is a pioneer in developing the principles of values-based management and is an acknowledged authority on how to make long-term shareholder value the essential driver of corporate strategy. His latest work, Saving Capitalism from Short-Termism, is a clarion call for conquering the addiction to short-term profit—and getting on the path to building long-term value.
Rappaport’s solution to short-termism is simple but profound: business leaders must align the interests of corporate and investment managers with those of their shareholders and beneficiaries. His plan includes:
If corporate and investment leaders do not address the problem of short-termism, more financial crises may be in store—and they are likely to be more severe and broader than the meltdown in 2008.
The trade-off is clear: We can continue to pursue short-term profit at the expense of economic vitality, individual financial security, and perhaps even the dominance of the free-market system itself. Or we can take the responsible path outlined in this book and generate innovation, quality, growth, and value over the long term.