Long-term investment and accounting: Overcoming short-term bias
This report looks at the evidence on whether financial reporting encourages short-termism and asks whether it would be possible for financial reporting to provide better information on long-term performance.
Financial reporting has been accused of encouraging short-termism in various ways: through the effects of using fair values; by not providing information on long-term performance; through excessive frequency of reporting; by writing off rather than capitalising spending on long-term assets such as intangibles; and by ignoring long-run effects on the natural world or on society as a whole. The report looks at the evidence on each of these claims and, where appropriate, at what might be done to counter any potential short-termism.
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