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Challenges of Short-termism in Corporate and Investor Behavior
The chapter explores the detrimental effects of short-term thinking in corporate and investor actions, discussing issues like misaligned incentives, the impact of CEO tenure on decision-making, and the prevalence of prioritizing quarterly financial targets over long-term value creation. It also delves into how phenomena like Gresham's Law, whiplash monetary policy, information overload, and reflexivity in markets contribute to exacerbating short-term behaviors and risky practices in financial markets.