Capital Market Short-Termism and Indian Company Long-Term Prospects

Over the course of the last several decades, the capital markets have been witness to spectacular development. This shift may be understood in terms of rising quantities of money generated in the primary markets, increasing volumes of transactions in the secondary markets, technical improvements, globalization and integration of capital markets, as well as changes in the investor profile. These new developments are usually encouraging, and they portend well for the financial markets' prospects in the years to come. However, the developments that have occurred in the financial markets are not entirely good in every respect. The very same shifts that brought about favorable advances also brought about a few undesirable shifts in the situation. The phenomenon known as "short-termism" is one of the many unfavorable aspects, but it is the one that seems to be sticking out the most among the others. When compared to the long-term, having a preference for the here and now or the very near future is an example of short-termism. There is a discernible desire for outcomes in the short term, and there is evident impatience to wait for results in the long term. Changes in the capital markets are thought to be responsible for a number of factors that contribute to short-termism. Changes in the investor profile, regulatory requirements for revealing financial results on a quarterly basis, and the connection of CEO remuneration to short-term financial success are some of the drivers of this trend. The view that short-termism is detrimental to the long-term prospects of companies is one that is regularly voiced by academics, business leaders, industry specialists, and government officials. According to the prevalent school of thought, short-termism encourages all parties involved to concentrate on the immediate benefits of their activities while ignoring the potential consequences such acts might have on the long run