CEOs turfed too soon by short-sighted shareholders

Study looks at risks when public companies put too great a focus on short-term results
By Liz Bernier
|Canadian HR Reporter|Last Updated: 03/21/2016

CEOs of publicly traded companies turn over too quickly, putting firms at a long-term disadvantage, according to a study from the University of British Columbia’s Sauder School of Business in Vancouver.

The major difference is in public versus private firm myopia, according to Kai Li, finance professor at the university and co-author of the study. 

 “We see many public companies nowadays that worry about meeting short-term earnings targets, like quarterly earnings targets. So CEOs, top management, are under constant pressure to make those targets — otherwise, stock prices will go down and they will be targeted by activist shareholders or other competitors, and their own pay (may be) directly linked to stock prices.”