‘Stakeholder capitalism versus short-term shareholders’: Behind the Long Term Stock Exchange’s vision for better-principled companies
- The Long Term Stock Exchange encourages companies to aim for long term financial gains.
- The new stock market’s listing standards require companies to be held accountable for their commitments to stakeholders.
San Francisco-based Long Term Stock Exchange wants to transform how companies measure their success. The stock market, which launched in September, crosses out antiquated reliance on quarterly performance and replaces it with a long term vision.
LTSE’s innovation stems from its listing standards that require companies to prioritize success over the span of decades and for future generations. This approach greatly differs from typical boardroom attitudes that espouse a culture of short-termism. According to a study in the Journal of Accounting and Economics, 55 percent of corporate upper management would not make an investment that would benefit a company in the long run if it would deflect from quarterly consensus earnings.
“Listing on LTSE means a company is creating incentives – in compensation and decision-making – to empower its team to make the right choice for success over years and decades rather than being driven by a myopic quarterly cadence that prevails on some other exchanges,” said LTSE’s president emeritus, Michelle Greene.
The stock market appeals to companies that want to operate with a focus on long term value creation and a consideration for multiple stakeholders such as local communities and employees.
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