The more we as a society accept aggressive business behavior, the more we find the lines crossed.”

Law Professor Stuart Green about the fine line between aggressive business conduct and criminality as quoted in “Trying Not to Keep Up With the Andersens.” Law.com, July 26, 2006.

Professor Green’s insight made me applaud the newly released Breaking the Short-Term Cycle report issued by the Business Roundtable Institute for Corporate Ethics even more.  The report recommends that companies shy away from short-term quarterly earnings targets and instead focus on long-term objectives.  The Institutute’s research confirms what practitioners and observers of corporate governance and compliance practices, including myself, have long suspected: the long obsession with short-term objectives has the unintended consequences of undermining long-term strategies.

From a legal perspective, the incessant need to polish numbers can sideline all but the most minimal compliance initiatives and thereby result in unnecessary risk taking and more latent liabilities that can blow-up when you least expect it.  Thus, chasing short-term profits destroys long-term value and reduces overall returns on investment.