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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.

Photo: Getty Images/Mario Gutierrez

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