David Millon


Amidst concerns about the negative effects on long-run value and competitiveness, one overlooked consequence of short-termism is its impediment to corporate social responsibility (CSR).In this Article, Part II examines the short-termism phenomenon, first from the point of view of investors and then from that of corporate managers, and summarizes widely held views about the social costs of short-termism. Part III then shifts the focus to the impact of shorttermism on CSR, a problem that has been largely overlooked, and develops two theories or models of CSR: the “ethical” and the “strategic.” Part III also explains how short-termism presents a significant obstacle to both models of CSR, which compounds concerns about the impact of short-termism on long-run corporate success. Accordingly, it is all the more urgent to understand the causes of institutional investor shorttermism, a subject that has not received the attention that it deserves. In Part IV, the Article first examines the pressures that institutions— particularly public and private pension funds—face to meet their current obligations. It then turns to competition among institutions for investor funds, a problem for mutual funds in particular. Finally, the Article touches briefly on competition among independent investment advisors and fiduciary duty law as potential contributors to the short-termism phenomenon.