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Observers have argued that managers pay too much attention to short term results at the expense of long run value. This article expands on the managerial implications of research that examines the relationship between short-termism and firm performance. Using capital expenditure data from US manufacturing firms, the authors confirm that most firms have the opportunity to increase performance by lengthening their investment horizons. However, a small subset of firms that make extremely long horizon investments would benefit from shorter investment time horizons. The authors make several recommendations for managers seeking to lengthen investment time horizon to increase firm profits.

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David Souder

David Souder

University of Connecticut

David Souder is an Associate Professor and PhD Coordinator for the Management Department of the University of Connecticut’s School of Business and an Ackerman Scholar. He holds a PhD from the University of Minnesota and a BS from The Wharton School of the University of...

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Philip Bromiley

Philip Bromiley

University of California, Irvine

Philip Bromiley (Ph.D., Carnegie-Mellon University) is a Dean’s Professor in Strategic Management at the Merage School of University of California, Irvine. Previously, he held the Carlson Chair in Strategic Management and chaired the Department of Strategic Management &...

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Scott Mitchell

Scott Mitchell

University of Kansas

Scott Mitchell is an Assistant Professor of Strategic Management at the University of Kansas School of Business. Scott received his PhD in Strategic Management from the University of California, Irvine, his MBA from the University of Kansas, and his BA from Columbia...

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Greg Reilly

Greg Reilly

University of Connecticut

Greg Reilly is Associate Professor of Management at the University of Connecticut School of Business. Greg earned his Ph.D. at the University of Wisconsin, and his MBA and BA Mathematics from the University of Michigan. Greg teaches the integrative strategy classes at...

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