New York Alumni Breakfast Series with Timothy Koller, '81
April 28, 2017: 7:30 AM - 9:00 AM
Join Timothy Koller, '81, as he discusses the economic impact of short-termism.
The Muse Hotel
130 W 46th Street
New York, New York
Companies deliver superior results when executives manage for long-term value creation. This has long seemed intuitively true, but the impact has not been measured. New research from the McKinsey Global Institute measures the impact and finds that long-term oriented companies outperform on revenue and earnings growth, job creation, and total returns to shareholders. If more companies were long-term focused, the economy would also perform better, possibly creating as many as 5 million more jobs over the last 15 years.
One often cited reason companies focus on the short-term is pressure from investors and analysts for short-term earnings gains. Yet, 75% of shares are held by long-term investors. Our research shows that while short-term investors may affect the near term volatility of share prices, over time long-term investors set the price. We recently surveyed long-term investors and found that they want companies to make decisions that benefit long-term value creation. They don't care about short-term earnings volatility or meeting consensus earnings estimates.
Executives can't simultaneously satisfy short- and long-term oriented investors. By understanding their long-term investors better, we hope that executives will have the courage to ignore the short-term investors.
Timothy Koller (Speaker) '81
Partner, McKinsey & Company
Timothy Koller is a partner in McKinsey's New York Office where he is a leader of the Strategy and Corporate Finance practice. In his 30 years of consulting, Tim has served clients globally on value creation, corporate strategy, capital markets issues, and M&A transactions.
Tim is the lead author of Valuation: Measuring and Managing the Value of Companies. Valuation, now in its 6th edition, has sold more than 600,000 copies. It is used as a textbook at top business schools, including Wharton, the University of Chicago, MIT, INSEAD, Tuck and Northwestern. Tim is also the lead author of Value: The Four Cornerstones of Corporate Finance. Value aims to help senior executives, board members and non-financial executives understand the linkages between strategic decisions and value creation and to have the courage to focus on true value creation rather than the latest fads and misconceptions.
Tim leads a group of expert consultants and leads much of McKinsey's corporate finance research. He has written more than 70 articles on a range of finance topics, including articles for the Harvard Business Review and the Strategic Management Review. He also collaborates regularly on research with the McKinsey Global Institute.