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Tima Bansal | CEOs should focus on long term, study says

  • Wall Street Journal
  • |
  • Jan 4, 2017
Tima Bansal | CEOs should focus on long term, study says

The Wall Street Journal features research co-authored by Ivey's Tima Bansal and Boston University's Caroline Flammer suggesting companies need to ditch their focus on short-term gains and take a longer view.

The study finds a switch to a long-term outlook can improve a company’s operating performance by several measures including return on assets, operating profits, and sales growth—within two years.

With an increased emphasis on long-term incentives, Bansal and Flammer found companies boosted their efforts to innovate and pursue riskier forward-looking projects.

“Although both managers and investors acknowledge that short-termism may be harmful to business, we provide clear, causal evidence of the harm in this research,” said Bansal. “Firms that offer long-term incentives for executives experience a higher share price right away and higher profits after one year. We discovered two important reasons: the firm invests more in research and development and invests more in stakeholders. Through this research, we are able to show that long-term executive incentives help the firm and helps society.”

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