Ending the Woes of Short-Termism: The Long-Term Stock Exchange

by: Andrew Hoffman

Publication Date: April 21, 2017
Length: 22 pages
Product ID#: 1-430-504

Core Disciplines: Accounting/Finance, Economics, Entrepreneurship & Innovation, Ethics, Strategy & Management, Sustainability

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Teaching Note

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Eric Ries, one of the most prominent entrepreneurs from Silicon Valley, is launching the Long-Term Stock Exchange (LTSE), a new stock exchange for companies and investors that want to focus on long-term values and sustainable development rather than short-term profit gains. Despite LTSE having a strong value proposition for many companies, this case analyzes the many business challenges that Ries and LTSE must overcome: the large shift required in the systems-thinking of current investors, limiting shareholders’ control and influence, gaining the critical mass required to achieve scale and profitability, government legislation and permits, and gaining trust and credibility from potential companies and investors. This case asks students to articulate the risks within the existing, short-term focused stock exchange system, as well as identify the forces that produce short-termism in publicly listed companies.

Teaching Objectives

After reading and discussing the material, students should:

  • Articulate the risks inherent to the current short-term focused stock exchange system.
  • Define the forces that produce short-termism in publicly listed companies.
  • Speak to the challenges of systemic change within the current financial exchange system.