Government fails short-term test

Short-termism in corporate Britain can only be solved by company boards, and not by politicians, says the Institute of Directors.

Responding to a Government enquiry into short-termism, launched by Business Secretary Vince Cable, the IoD says governments, with their own short-termist tendencies, are not well placed to criticise companies for not always following a long-term strategy.

The IoD says it would be better if the Department for Business, Innovation and Skills (BIS) focused totally on supporting businesses and helping them create new jobs, rather than carrying out "yet another corporate governance enquiry."

IoD director-general Miles Templeman, said: "The main underlying causes of short-termism in corporate Britain cannot be overcome with new Government policies or regulations.

"Some short-termism is an inherent part of a stockmarket listing. Company boards need to become more active in ensuring that companies adopt a time horizon that maximises corporate value creation.

"With seven Business Secretaries in less than 10 years, politicians and governments are not particularly well placed to lecture corporate management teams on the need for continuity and a long-term strategy. Instead of yet another enquiry into corporate governance, the Business Department would be more effective if it focused all of its time on supporting businesses and helping them create new jobs."

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