That is the topic of my latest Bloomberg column, here is one bit:
Still, it’s not been established that American corporations are on average more short-term in their thinking than they ought to be.
Perhaps most importantly, it is often easier and better to plan for the shorter term. In information technology, the average life of a corporate asset is about six years, in health care it is about 11 years, and for consumer products it runs about 12 to 15. Very often it is hard for a company to plan its operations beyond those time periods, as the U.S. economy is no longer based on durable manufacturing machines. Production has shifted toward service sectors with relatively short asset lives, and that may call for a shorter-term orientation in response.
There are many other points of interest. I would note that from a social welfare function point of view, everyone thinks in too short a term. But from an agency point of view, I also see a lot of excessive long-term thinking in corporations:
Many tech startups have high valuations even though revenue is zero or low. Again, those judgments may or may not be correct, but clearly investors are trying to estimate longer-run prospects. During the dot-com bubble of the 1990s, there was too much long-run, pie-in-the-sky thinking and not enough focus on the concrete present.