Are you sure?
This bookmark will be removed from all folders and any saved notes will be permanently removed.
Patience as a corporate virtue
Originally published in The Christian Science Monitor, June 24, 2015.
Financial regulators in Britain have imposed a rather unusual rule on the bosses of big banks. Starting next year, any guaranteed bonus of top executives could be delayed 10 years if their banks are under investigation for wrongdoing. The main purpose of this “clawback” rule is to hold bankers accountable for harmful risk-taking and to restore public trust in financial institutions. Yet officials also hope for a much larger benefit: more long-term decision-making, not only by banks but by all corporations, to build a stronger economy for future generations.
“Short-termism,” or the desire for quick profits, has worsened in publicly traded companies, says the Bank of England’s top economist, Andrew Haldane. He quotes a giant of classical economics, Alfred Marshall, in describing this financial impatience as acting like “children who pick the plums out of their pudding to eat them at once” rather than putting them aside to be eaten last.
The average time for holding a stock in both the United States and Britain, he notes, has dropped from seven years to seven months in recent decades. Transient investors, who demand high quarterly profits from companies, can hinder a firm’s efforts to invest in long-term research or to build up customer loyalty. This has been dubbed “quarterly capitalism.”
Enjoy 1 free Sentinel article or audio program each month, including content from 1898 to today.
November 9, 2015 issue
View Issue-
Letters
Eileen, CS2, Truth Johnston, PYE
-
The good worth holding on to
Mark Swinney
-
God’s protection in a flash flood
Brian Asher
-
Being a witness for truth
Lawrence “Chip” Horner
-
Protection and my first ‘meal’ of the day
Elaine Jarvis
-
A new song
Aleta Spence
-
Learning to forgive
Japhet Tekila
-
Throat pain gone
Toni Turpen
-
Free of hip pain and concerns about aging
Rosa Fern Sinkler
-
Communion with God brings rapid healing
Charlotte MacDonald
-
Sometimes a light surprises
Photograph by Margaret Zuber
-
Patience as a corporate virtue
The Monitor’s Editorial Board
-
A spiritual priority and its long-term blessings
Stephen Carlson
-
The most glorious destination
Barbara Vining