CEOs: 'Investors are a pain'

A survey suggests 60% of CEOs reckon investors' demands make it difficult to plan ahead. CEOs annoyed with investors? You heard it here first.

by Emma Haslett
Last Updated: 01 Feb 2012
Well, slap our thighs and call us Shirley: it turns out CEOs find investors’ demands a touch irritating - if not downright disruptive. That’s according to research by Oxford Economics, commissioned by ‘two of the world’s most prestigious accounting organisations, CIMA and AICPA (we know), which found that 60% of chief execs think demands by shareholders are ‘inconsistent with growing a sustainable business’. That’ll learn them, won’t it?

The research, conducted among 300 CEOs (including, apparently, the likes of HSBC Chairman Douglas Flint, Unilever CEO Paul Polman and Diageo CEO Paul Walsh), suggested that shareholders’ ambitions differ greatly from management’s. Just under seven in 10 said that investors focus too much on short-term rewards, which makes it difficult to plan in the long-term, while 77% said the current financial reporting system focuses too much on financial data (you don’t say), and doesn’t allow businesses to demonstrate their ‘true value’.

In fact, financial reporting seems to be another particular gripe for chief executives: three-quarters of those surveyed said there is ‘room for improvement’ when it comes to reporting non-financial value (like how satisfied customers and/or employees are, innovation, quality of products, etc). Just over half added that it’s something they need to improve over the next 18-24 months.

At a time like this, when the financial data for companies across the board is plummeting, it’s certainly an issue worth thinking about – it’s not surprising that companies want to take the spotlight off their profits. And it’s not just a case of white-washing, either: looking at the non-financial value of a company could help lenders to work out what will happen to it in the long-term. If the customers and employees are happy and the company is coming up with plenty of new ideas, presumably its chances of surviving are much higher than if there’s mutiny in the ranks and innovation is nonexistent. It could even give us an interesting new angle on whether high executive pay-packets are justified, too...

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