Perpetual chief executive David Deverall has used a speech to the InstituteofChartered AccountantsinAustralia to warn of the impact of short-termism on investment decisions.
Deverall revealed the findings of a Perpetual survey of business leaders pointed to some disturbing trends, including that many of those surveyed are risking long-term wealth creation in favour of short-term earnings and incentives.
He said the survey revealed that while business leaders believed investors and shareholders were more interested in long-term performance and strategy, nearly one in four believed their current financial reporting was too focused on the short term.
Deverall said short-termism could destroy long-term value, decrease market efficiency, reduce investment returns and impede efforts to strengthen corporate governance.
“This growing imbalance towards short-term issues is posing a real threat to wealth creation over the longer term, particularly in superannuation,” he said.
“Business leaders need to invest in growth strategies which will deliver long-term value for shareholders,” Deverall said. “Communicating to the market needs to provide a balance between ticking off the short-term targets and providing information about how strategic initiatives will delver long-term growth.”
