Are Quarterly Earnings Pressures Hurting Companies’ Long-Term Innovation Prospects?
If public companies are increasingly focused on meeting quarterly earnings expectations, what happens to the innovations that require years of investment and patience to develop?
New research published in the INFORMS journal Management Science suggests the answer could have far-reaching implications for businesses, investors and the broader economy. The study found that companies facing greater short-term financial pressures tend to produce fewer breakthrough and novel innovations, the kinds of discoveries that can shape industries for decades.