Short-termism and myopia on the part of corporate managers, analysts, and investors have created a business environment driven by the excessive focus on short-term results and the need to meet earnings targets at the expense of long-term value creation. These are accompanied by numerous consequences, including the potential for short-term-oriented firms, particularly in the U.S., to lag behind global long-term-oriented firms, as well as the potential for short-term mindsets in the corporate world to catalyze financial crises. In this paper, I demonstrate that the market generally assigns higher values to long-term firms rather than short-term ones. This is evidenced by the fact that firms characterized to be long-term according to various financial metrics have higher valuation multiples than their short-term counterparts. The results suggest that the market has a degree of sophistication that rewards investments for the future rather than earnings management and present gratification, and that the corporate world should therefore increasingly develop a long-term mentality.

<p>Aim of the Thesis: To investigate from a company’s perspective if the pressure for companies to produce quarterly reports has turned away their attention from working towards long-term value creation. The companies investigated are listed on the large-cap section on the Swedish stock exchange (OMX Nordic Exchange Stockholm AB).</p><p>Methodology: A quantitative approach has been used and empirical data has been collected through questionnaires. The data has been analyzed and presented with descriptive statistics.</p><p>Theoretical Perspectives: A literature review has been conducted and resulted in a theoretical framework illustrating the concepts of quarterly reporting, long-term value creating, short-termism and forecasting.</p><p>Empirical data: The empirical data was collected by distributing questionnaires to the companies listed on the large-cap section of the OMX.</p><p>Conclusion: Companies listed on the large cap section of the OMX do not perceive that the pressure to produce quarterly reports affects them in a negative way. The study also showed that many companies lack awareness of the risks associated with short-termism.</p>

Aim of the Thesis: To investigate from a company’s perspective if the pressure for companies to produce quarterly reports has turned away their attention from working towards long-term value creation. The companies investigated are listed on the large-cap section on the Swedish stock exchange (OMX Nordic Exchange Stockholm AB). Methodology: A quantitative approach has been used and empirical data has been collected through questionnaires. The data has been analyzed and presented with descriptive statistics. Theoretical Perspectives: A literature review has been conducted and resulted in a theoretical framework illustrating the concepts of quarterly reporting, long-term value creating, short-termism and forecasting. Empirical data: The empirical data was collected by distributing questionnaires to the companies listed on the large-cap section of the OMX. Conclusion: Companies listed on the large cap section of the OMX do not perceive that the pressure to produce quarterly reports affects them in a negative way. The study also showed that many companies lack awareness of the risks associated with short-termism.

Abstract: Background: In the southern areas of Sweden, around the birthplace of household brands such as IKEA, Peab, and Husqvarna, widespread entrepreneurial ventures have grown and seen their first few years of success. Alongside our collaborating private equity firm Entreprenörinvest we are trying to further expand the knowledge and descriptive concepts of what makes these entrepreneurial ventures successful. Purpose: The thesis builds on our pre-existing idea of developing research that would aim to bring the research fields of management and finance together while examining literature taught during our bachelors’ program. The managerial and finance-oriented literature rarely explain equity transactions on a regional level, in smaller companies. M&amp;A practices are useful when firms look for organic growth yet want to continue their growth journey at a sustainable pace.  Method:  A qualitative research method has been used together with case studies, and case interviews from our collaborating company.  Conclusion: This thesis is written in collaboration with the private equity firm Entreprenörinvest. The literature would suggest that a structure such as the Acquisitional Paradigm would be used since private investments have many unknown factors and risk possibilities. The Case studies predict certain concepts brought up by the Acquisitional Paradigm while explaining and defining the core idea or rather the philosophy of the investment. The research concludes that the aspects of the entrepreneurial process are more related to proper due diligence rather than relations and people involved in the transaction. However, the entrepreneurial process also roots itself in the knowledge and relationship between buyers and sellers. Usually, more entrepreneurial business owners tend to prefer investing alongside their pre-existing relationships.

Bakgrund: Short-termism beskrivs i såväl den vardagliga debatten som i akademiska undersökningar som ett hinder för bolags långsiktiga värdeskapande. Trots detta så är inte relationen mellan short-termism och långsiktigt värdeskapande undersökt tillräckligt. Utöver detta så har tidigare studier funnit att tidshorisonten inom bolagsstyrning påverkar ett bolags finansiella prestationer, men inte kunnat fastställa hur relationen mellan short-termism, långsiktigt värdeskapande och finansiella prestationer ser ut. Syfte: Syftet med denna studie är att öka förståelse för relationen mellan short-termism, långsiktigt värdeskapande och finansiella prestationer, samt förklara vilka faktorer som påverkar variation av short-termism inom den svenska IT-branschen. Metod: Genom en kvantitativ metod i kombination med en deduktiv ansats så har studien undersökt hur relationen mellan olika fenomen inom bolagsstyrningen ser ut. Detta är gjort med ett urval bestående av IT-bolag som är noterade på Stockholmsbörsen. Slutsats: I en svensk kontext är agentteorin applicerbar, där ägande tycks vara starkast drivande faktorn när det kommer till tidshorisonten inom bolagsstyrning. Studien finner inte några empiriska bevis för att en relation mellan short-termism och långsiktigt värdeskapande finns, vilket påvisar att dessa två fenomen inom bolagsstyrning inte nödvändigtvis har en negativ relation mellan sig. Resultat från studien har dock visat att short-termism har en positiv relation till kortsiktiga finansiella prestationer, medan långsiktigt värdeskapande har en negativ relation till kortsiktiga finansiella prestationer. Det ser studien som ett empiriskt bevis för nyttan av att kunna balansera short-termism och långsiktigt värdeskapande för att uppnå en effektiv bolagsstyrning. / Background: Short-termism is described in both commonplace debate and academic research as an obstacle to company's long-term value creation. Nevertheless, the relationship between short-termism and long-term value creation is not investigated enough. In addition to this, previous studies have found that the time perspective within corporate governance affects a company's financial performance, but has not been able to determine how the relationship between short-termism, long-term value creation and financial performance appears. Purpose: The purpose of this study is to increase understanding of the relationship between short-termism, long-term value creation and financial performance, as well as explain the factors that influence the variation of short-termism within the Swedish IT industry. Method: Through a quantitative method in combination with a deductive approach, the study has investigated the relationship between different phenomena within corporate governance. The sample consists of companies from the IT industry listed on the Stockholm Stock Exchange. Conclusion: In a Swedish context, the agency theory is applicable, where ownership seems to be the strongest driving factor when it comes to the time perspective within corporate governance. The study does not find any empirical evidence that a relationship between short- termism and long-term value creation exists, which shows that these two phenomena of corporate governance do not necessarily have a negative relationship to each other. However, the results of the study have shown that short-termism has a positive relation to short-term financial performance, while long-term value creation has a negative relation to short-term financial performance. These empirical evidences indicate the benefit of being able to balance short-term and long-term value creation in order to achieve effective corporate governance.