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Bridge over ocean
1 June 2012 Position Paper

Visionary Board Leadership

Stewardship for the Long Term

  1. Matthew Orsagh, CFA, CIPM

This report revisits the topic of short-termism—originally discussed in the 2006 report Breaking the Short-Term Cycle—but this time from a different perspective and with a very specific audience in mind: the corporate director—specifically, the “Visionary Director.” A Visionary Director is a director committed to working with management to make a company successful in the long-term, and who does not tolerate corner-cutting strategies to meet fleeting short-term expectations. This report identifies the issues, opportunities, and leading practices of Visionary Boards to combat short-termism and build long-term value for shareowners.

Visionary Board Leadership: Stewardship for the Long Term View the full article (PDF)

  1. Dean Krehmeyer, Matthew Orsagh, and Kurt N. Schacht, Breaking the Short-Term Cycle: Discussion and Recommendation on How Corporate Leaders, Asset Managers, Investors, and Analysts Can Refocus on Long-Term Value, CFA Centre for Financial Market Integrity and Business Roundtable Institute for Corporate Ethics (2006).

  2. Business & Society Program’s Corporate Values Strategy Group,Overcoming Short-Termism: A Call for a More Responsible Approach to Investment and Business Management, Aspen Institute (9 September 2009); Research and Policy Committee, Built to Last: Focusing Corporations on Long-Term Performance, Committee for Economic Development (2007); Rebuilding Corporate Leadership: How Directors Can Link Long-Term Performance with Public Goals, Committee for Economic Development (2009);Sustainable Capitalism, Generation Investment Management, (15 February 2012).

  3. John R. Graham, Campbell R. Harvey, and Shivaram Rajgopal, “The Economic Implications of Corporate Financial Reporting,”Journal of Accounting and Economics, vol. 40, no. 1–3 (December 2005):3–73.

  4. Charles Bowman, “The Great Experiment—A Tale of Two Reports Highlighting the Value of Transparency” (7 April 2008)

  5. “Parsons Blames Citi Vote on Failure to Communicate,” Reuters (19 April 2012): www.reuters.com/article/2012/04/19/us-financial-regulation-citi-idUSBRE83I1IF20120419.

  6. Robert G. Eccles, Ioannis Ioannou, and George Serafeim, “The Impact of a Corporate Culture of Sustainability on Corporate Behavior and Performance,” Harvard Business School Working Paper 12-035 (9 May 2012).

  7. Francois Brochet, Maria Loumioti, and George Serafeim, “Short-Termism, Investor Clientele, and Firm Risk,” Harvard Business School Working Paper 12-072 (February 2012).

  8. Elizabeth Mullen, “Main Street’s Mood Warms for Directors, Cools for CEOs,” NACD Directorship Boardroom Intelligence (March/April 2012).

  9. Matteo Tonello and Judit Torok,The 2011 U.S. Director Compensation and Board Practices Report, The Conference Board Report No. R-1486-11-RR (2011).

  10. Lynne L. Dallas, “Short-Termism, the Financial Crisis, and Corporate Governance,”Journal of Corporation Law, vol. 37, no. 2 (2012):264–365. (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2006556)

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Publisher Information
CFA Institute 44 pages doi.org/10.2469/ccb.v2012.n3.1 ISSN/ISBN: 978-0-938367-54-3