Finance
Sacrificing Long Term Value Creation for Short Term Profits!
In today?s corporate environment, professional corporate finance needs are increasing steadily. Major factors include the capital markets need for transparency in financial reporting and increasingly strict regulatory requirements. The need to fully comply with regulatory requirements can have numerous significant implications for an organization.
These include but are not limited to incurring large financial reporting cost, including investor communication and relations, constant pressure to meet reporting deadlines, and a lack of transparency of financial data and reporting processes.
Nevertheless, the highest cost corporations have to pay is for the constant ?cat and mouse? game to meet quarterly and annual projections. This constant pressure to increase short term profits hinders the company to achieve long-term growth and value creation. Too much money is spent on analyzing, monitoring, communicating, and adjusting forecasts, resulting that the organization is not able to quickly respond to its competitive environment and think in terms of long term value creation.
It is vital for companies to realize that they have to weight the cost and benefits of these issues. Many companies are not up to the challenge and loose their competitive edge. They should always try not to sacrifice long term value creation for short term profits.
Peter Kopitz is currently living in Bangkok, Thailand after graduating with Honors from the University Of Chicago Graduate School Of Business with a Masters Degree in Business Administration. He is actively involved in researching economic and political development in Thailand, focusing primarily on property development, security analysis and investment banking. Hawaii Home Loans | Honolulu Realtor | Hawaii Rentals |
Peter Kopitz
Tags: corporate finance, long term value creation, earnings forecastsSimilar articles
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