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Functions Of Management It Can Research Proposal

If the firm's results are shaping up to be disappointing over the next few quarters, significant conflict may arise for the CEO in trying to decide which alternative is best. Further, short-term orientation may directly benefit the CEO, who may have his/her compensation tied more to short-term performance. There may be, however, some long-term benefits to satisfying the Street in the short-run. One potential benefit is with regards to the ability to raise capital. If the firm is experiencing strong short-term...

Moreover, if the short-term performance improvements flow through to the balance sheet, the company's cost of capital may also decrease as the risk associated with the company would be lower. Another potential advantage of satisfying the Street is that it may give the company more time to identify new opportunities that may ultimately have a higher payoff than did the initial long-term opportunity.

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