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The Myth of Corporate America’s Short-Term Thinking - The New York Times [1]

['Steven Rattner']

Date: 2018-07-02

American companies, according to their critics, are so focused on making quick profits that they have abdicated building for the long term. That idea has captivated policymakers, commentators and even some leading business executives.

The complaint has reached a fevered pitch amid news that companies are diverting much of their proceeds from the recent tax cut into buying back record amounts of their own shares.

But there is little evidence to back up the idea that American businesses are overly focused on short-term boosts to profits and stock prices.

The easiest path for companies to goose earnings would be to cut back on investment. However, business investment has remained between 11 percent and 15 percent of gross domestic product since 1970. Last year, corporate investment, which includes structures, equipment and the like, totaled 12.6 percent of G.D.P.

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[1] Url: https://www.nytimes.com/2018/07/02/opinion/corporate-stock-buyback-short-term-profit.html

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