Bloomberg News

Haldane Says Investors’ Short-Term Views Are Diminishing Returns

August 22, 2012

Andy Haldane, executive director for financial stability at the Bank of England, said investors’ increasing preference for short-term results is costing them returns and hindering the recovery, according to an article in Prospect magazine.

Future cash flows are getting too heavily discounted, with average returns one year ahead reduced by about 5 percent to 10 percent “too much,” Haldane wrote in the September issue of the magazine, citing a study he conducted with Richard Davies. A survey of 400 chief financial officers that showed more than three quarters would reject projects enhancing long-term value to meet earnings numbers illustrates that “quarterly capitalism is seriously inhibiting long-term investment.”

Policies to counter this outlook should create financial incentives to reward a long-term view, Haldane said. These may include loyalty bonuses to shareholders and employees based on length of tenure, or capital-gains rates on project cash flows that taper off according to the length of the holding period.

“There is compelling evidence that short-termism is slowing investment today and so growth tomorrow,” he said. “In the current environment, that is something we can ill afford.”

To contact the reporter on this story: Jennifer Ryan in London at

To contact the editor responsible for this story: Craig Stirling at

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