3.4.1 Corporate influences

Question 1

What are the main causes of short termism?

3

Answer 1

• Relationship between Plc and financial markets
• ST performance measures to award bonuses
• Threat of takeover (^share price)

Question 2

What are the effects of short termism?

4

Answer 2

• > R&D
• Cut workforce quick, ^labour turnover, >exp/skill
• Takeovers to grow
• > Investment image building

Question 3

How is the relationship between plc and financial markets a cause of short termism?
2

Answer 3

• City investors performance judged quarterly

- They look for company’s strong now