On this page we'll collect research on how people's time perspective -- long term vs. short term -- affects their ethical behavior. In the long run, good ethics generally pays off, as we show here. But life is full of chances to make more money quickly by acting unethically, even if these actions undercut your (or your company's) long term returns. This is why Gus Levy, at Goldman Sachs, urged his people to "be long term greedy, not short term greedy."
However, changes in the nature and speed of American business have made it harder for individuals and companies to focus on long term returns. As one example: The average holding period for stocks has dropped from 100 months in 1960 to six months in 2010. (This does not include high-speed trades.) If most shareholders are very short term shareholders, they will want management to boost the stock price now, not over the long run.
...we'll cover Zimbardo on Time Perspective
--any profile of Goldman Sachs, to see how they left behind the "long term greedy" philosophy? Is the critique by Greg Smith thought to be legitimate?
- Why We Live in a Second Robber Baron Era: Shareholder value theory is at the root of our “second robber baron era” and encourages short-term thinking
- 28 Years of Stock Market Data Shows a Link Between Employee Satisfaction and Long-Term Value: Firms with high employee satisfaction outperform their peers by 2.3% to 3.8% per year in long-run stock returns – 89% to 184% cumulative – even after controlling for other factors that drive returns. Moreover, the results suggest that it’s employee satisfaction that causes good performance, rather than good performance allowing a firm to invest in employee satisfaction.
- Here's How Self-Centeredness Can Make You More Considerate: Piece by ES collaborator Dave Mayer on how considering your legacy can promote prosocial behavior.
- The Biology of Corporate Survival: Many firms still pursue classic approaches to strategy that were designed for more-stable times, emphasizing analysis and planning focused on maximizing short-term performance rather than long-term robustness.
- Legal-General Calls For an End to Quarterly Reporting: [R]eporting which focuses on short-term performance is not necessarily conducive to building a sustainable business as it may steer management to focus more on short-term goals and away from future business drivers.
- Invisible Hand versus Squeaky Wheel: Getting beyond short-term thinking to understand what drives corporations and what threatens the health of our financial system.
Relevant Images and Videos