Short‐Termism

Abstract

Short‐term pressures ( STP s), could be defined as factors acting upon (or within) an organization, which cause decision‐makers (explicitly or implicitly) either to use a discount rate higher than its cost of capital or to choose some time horizon beyond which future revenues are ignored altogether, or both. Short term pressures are determined by internal and external factors that affect time horizon of firms' decision making resulting in sub optimal and /or economically irrational choice of investment decisions. While during the early 1990s many UK's private companies appeared to have suffered from short‐ termism, research into recent global financial crisis and public private partnerships ( PPP s) suggest that UK banks and successive governments may have also suffered from the same short term pressures.