# Short termism

`kaal:entity:short-termism`

**Status.** derived

This node is assembled mechanically from the 21 claims that carry the concept tag `short-termism`. It is a roster of what the corpus says under this term. It is **not** an adjudicated definition: no single statement here has been ruled canonical, and no first-appearance call has been made. Read the claims and judge for yourself.

## Every claim under this term

21 claims across 13 works, 2010 to 2024.

**2010**

- [1558614-014](https://wulfkaal.github.io/claims/1558614-014) [mechanism/argued] -- The U.S. governance structure, built on periodic disclosure of performance data and stock price maximization, encourages risk taking because managers feel compelled to meet shareholder expectations at every reporting interval.
  > Risk taking in this context may be encour- aged by the perceived need to satisfy expectations of shareholders. Managers feel compelled to fulfill performance expectations whenev- er results are disclosed, be it quarterly, bi-annually, or annually.
  Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614
- [1558614-036](https://wulfkaal.github.io/claims/1558614-036) [design/evidenced] -- The German legislature enacted the VorstAG on the premise that managers who emphasize short term parameters lose sight of the corporation's long term benefit and are thereby incentivized to take irresponsible risks, and it accordingly required compensation reduction in a corporate crisis, a D&O deductible, and deferred payout of performance based pay.
  > "managers who emphasize short-term parameters in manage- ment lose sight of the long-term benefit of the corporation and are 185 incentivized to take irresponsible risks,"
  Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614

**2012**

- [2097160-025](https://wulfkaal.github.io/claims/2097160-025) [mechanism/argued] -- Replacing stock options with contingent convertible bonds both lowers total executive compensation and disincentivizes short-termism and the executive focus on quarterly stock price performance.
  > If stock options are replaced with CCBs, not only would the total compensation for executives be lowered; short-termism and executives' focus on quarterly stock price performance would also be disincentivized.
  Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160
- [2097160-036](https://wulfkaal.github.io/claims/2097160-036) [mechanism/argued] -- Against the critique that long-term debt in pay does not deter short-run risky bets because expected short-term gains exceed the discounted value of the debt, adding early-trigger contingent convertible bonds changes managers' incentives by forcing them to weigh the effects of triggering events rather than only the debt to equity mix of their portfolio.
  > portion of executives' compensation packages could change managers' incentives. Executives would no longer simply focus on the debt versus equity portion of their portfolio; they would also consider the effects of triggering events.237
  Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160

**2017**

- [2922176-004](https://wulfkaal.github.io/claims/2922176-004) [failure/argued] *(failure mode)* -- A focus on quarterly earnings and short-term stock price performance distracts an organization from identifying the strategies that would keep the firm relevant, which is why financially successful companies can still lose their market.
  > can easily distract an organization from the important business task of identifying strategies that can help a firm remain relevant in the future.
  Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176
- [2922176-006](https://wulfkaal.github.io/claims/2922176-006) [failure/evidenced] *(failure mode)* -- Microsoft lost relevance under Steve Ballmer because it optimized for short-term financial metrics instead of designing products for the next generation of consumers, even while sales tripled and profits doubled.
  > Microsoft missed these developments because it focused on short-term financial metrics, rather than on designing products relevant for the next generation of consumers.
  Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176
- [2922176-007](https://wulfkaal.github.io/claims/2922176-007) [failure/argued] *(failure mode)* -- Reforms that increase executive accountability to shareholders and increase shareholder control over executives do not solve the problem of corporate short-term focus.
  > Increasing the accountability of corporate executives to shareholders and increasing shareholder control over executives does not address the problem of short-term focus.
  Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176
- [2922176-008](https://wulfkaal.github.io/claims/2922176-008) [failure/argued] *(failure mode)* -- Increasing shareholder control over executives can be actively counterproductive: it further incentivizes the damaging emphasis on quarterly financial reporting that reform was meant to cure.
  > In fact, it may actually have the counterproductive and unintended effect of further incentivizing a damaging emphasis on quarterly financial reporting.
  Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176
- [2922176-014](https://wulfkaal.github.io/claims/2922176-014) [failure/argued] *(failure mode)* -- Stewardship pressures push companies toward an unhealthy focus on short-term dividends and share buybacks designed to please the stock market, the opposite of the long-term orientation the codes intend.
  > Indeed, stewardship pressures often expose companies to an unhealthy focus on short-term dividends and share buybacks designed to please the stock market.
  Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176

**2019**

- [3411897-013](https://wulfkaal.github.io/claims/3411897-013) [failure/argued] *(failure mode)* -- Less successful companies share a myopic short term focus on shareholder value maximization, which produces an unhealthy emphasis on share price, market valuations, and financial metrics that obscure issues of relevancy.
  > Less successful companies often share a myopic and short-term focus on shareholder value maximization that has led to an unhealthy emphasis on firm share price, market valuations, and financial metrics that obscure issues of relevancy.
  Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897
- [3411897-014](https://wulfkaal.github.io/claims/3411897-014) [failure/evidenced] *(failure mode)* -- Microsoft under Steve Ballmer missed the shift to networked technologies and mobile consumption because it focused on short term financial metrics rather than on designing products relevant to the next generation of consumers, and so ceased to be relevant despite excellent traditional metrics.
  > Microsoft missed these developments because it focused on short-term financial metrics, rather than on designing products relevant for the next generation of consumers.
  Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897

**2020**

- [3652481-010](https://wulfkaal.github.io/claims/3652481-010) [failure/argued] *(failure mode)* -- A DAO focus on the value enhancement of fungible tokens can produce short termism and lead the organization to ignore ethical and governance issues.
  > Yet, the focus on the value enhancement of fungible tokens can lead to short termism and may ignore ethical and governance issues.
  Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481

**2021**

- [3782201-027](https://wulfkaal.github.io/claims/3782201-027) [failure/argued] *(failure mode)* -- Because DAO performance assessment is based on optimizing fungible token value rather than on hierarchical or political processes, the focus on token value enhancement can lead to short termism and may cause ethical and governance issues to be ignored.
  > Yet, the focus on the value en- hancement of fungible tokens can lead to short-termism and may ignore ethical and governance issues.
  Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201
- [3782210-038](https://wulfkaal.github.io/claims/3782210-038) [empirical/asserted] -- Reputation has lost much of its meaning during the current institutional disruption: people in dying fields cash in on reputations built over previous generations in a fire sale mentality, and reputation itself is becoming a suspect concept.
  > Reputation has lost much of its meaning during the disruption that we are expe- riencing as the global society is emerging. As old institutions fall, there is a fire sale mentality amongst people in dying fields where they cash in on the reputations that were built over previous generations.
  Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210
- [3782214-022](https://wulfkaal.github.io/claims/3782214-022) [failure/argued] *(failure mode)* -- The main problem with all current peer to peer governance structures is the lack of proper incentivization: participants are not motivated to improve the whole organization over the long term, so they game the system for short term personal profit.
  > The main problem with all current PCP governance structures (such as they are) is the lack of proper incentivization. In business or in government, all participants need to be motivated to improve the whole organization over the long term.
  Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214
- [3799320-005](https://wulfkaal.github.io/claims/3799320-005) [failure/argued] *(failure mode)* -- The focus on value enhancement of fungible tokens can drive short termism in DAOs and cause ethical and governance issues to be ignored.
  > Yet, the focus on the value enhancement of fungible tokens can lead to short- termism and may ignore ethical and governance issues.
  Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320
- [3808852-016](https://wulfkaal.github.io/claims/3808852-016) [failure/argued] *(failure mode)* -- The DAO focus on enhancing the value of fungible tokens can produce short termism and can cause ethical and governance issues to be ignored, even as it frees non-performance reputational penalties from racial and cultural bias.
  > Yet, the focus on the value enhancement of fungible tokens can lead to short termism and may ignore ethical and governance issues.
  Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852
- [3808859-003](https://wulfkaal.github.io/claims/3808859-003) [failure/argued] *(failure mode)* -- Firms that fare worst under disruptive innovation share a myopic short-term focus on shareholder value maximization, because emphasis on share price and financial metrics obscures the question of whether the firm remains relevant.
  > Less successful companies often share a myopic and short-term focus on shareholder value maximization that has led to an unhealthy emphasis on firm share price, market valuations, and financial metrics that obscure issues of relevancy.
  Wulf A. Kaal, Decentralization – Why We Need Technology Infrastructure Upgrades (2021). SSRN: https://ssrn.com/abstract=3808859
- [3962614-003](https://wulfkaal.github.io/claims/3962614-003) [failure/argued] *(failure mode)* -- Lack of liquidity is one of the biggest problems in the traditional venture capital ecosystem, and the traditional VC model disincentivizes generating early profits because capital is locked in for an extended period of time.
  > One of the biggest problems in the traditional VC ecosystem is lack of liquidity.4 The traditional VC model disincentivizes generating early profits.5 Capital is "locked in" or "locked up" for an extended period of time.
  Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614
- [3962614-011](https://wulfkaal.github.io/claims/3962614-011) [mechanism/argued] *(failure mode)* -- Because venture capitalists typically want to cash out their gains five to ten years after the initial investment, they play an active role in directing portfolio companies toward a merger, acquisition, or public offering, which can carry significant downsides for those companies and their products.
  > because capitalists typically want to cash-out their gains five to ten years after initial investments, they play an active role in directing the company towards a merger, acquisition, or public
  Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614

**2024**

- [4957318-012](https://wulfkaal.github.io/claims/4957318-012) [failure/argued] *(failure mode)* -- Because renewal deadlines create recurring windows for legislative action, sunset clauses become instruments of political maneuvering in which lawmakers cater to interest groups or shifting political winds instead of pursuing long term policy solutions.
  > Because sunset clauses create periodic opportunities for legislative action, they can become tools for political maneuvering, allowing lawmakers to cater to specific interest groups or respond to shifting political winds rather than pursuing long-term, effective policy solutions.
  Wulf A. Kaal, The Future of Law - Dynamic Web3 Governance (2024). SSRN: https://ssrn.com/abstract=4957318

## Verify

Every claim above resolves to a record carrying a verbatim source quote, the sha256 of the source PDF, and a preformatted citation. Nothing here asks to be taken on trust.

    curl -s https://wulfkaal.github.io/entities/short-termism.md | sha256sum

**Canonical form.** This markdown file is the canonical hashed representation of this entity node. Its sha256 is the content hash.