Does a Long-Term

Orientation Create
Value??
Evidence From a
Regression
Discontinuity
Presented By: Group 13
Rishabh Das Bhowmick (19039)
Roma Kumari (19040)
Saina Anand (19041)
 • THIS PAPER IS ABOUT HOW A LONG TERM ORIENTATION IMPACTS
FIRM VALUE.
 It can be measured through changes in executives’ long term incentives,.
 This will examine by the proposal of shareholder and pass or fail by the
small margin of votes.
 Long term reward executives are CEO,CFO,COO and other senior
ABOUT THIS executives.
 The effect of long term incentives on company outcomes i.e. firm value,
PAPER operating performance, R&D, stakeholders relationships.
 Financial and economic crisis led to think differently –
 Leading companies started shifting away from short term goal to long
term goal
 Majority of the company continue to focus on meeting short term goals
even if doing so prevent the pursuit of long term project
Do Companies get benefit from long-
term orientation??
How long-term
orientation create value?
Financial
performance and
corporate strategy

Managerial and
policy implications
 Adoption of long-term
horizon for the firm value

Counteract myopic tendencies of team management

 Who can afford long term vision?

Companies that have deep pocket can afford long term vision rather than
focusing on short term target
Companies that perform better need to worry less about the short run
More talented CEO’s may take longer time perspective and at the short
time show better managerial result given their managerial abilities.
Operating
performance
• Return on Assets, net profit margin, and sales growth.
• ROA= is the ratio of operating income before depreciation
to the book value of assets.
• NPM= is the ratio of operating income before depreciation
to sales
• Sales growth= is the growth in sales from one fiscal year to
the next.
 Innovation

R & D expenditure= To
measure the investment
in innovation.
R & D expenses to total
assets
Thank you