by Simon Zadek at the World Economic Forum
"How can i take seriously my accountability to my investors if they are mainly hedge funds interested in making a quick buck, and totally uninterested in the future of the business i am responsible for growing". So reflected a Chief Executive of a leading business in quiet dialogue with me and his colleagues.
"We need Boards", commente a second Chief Executive over another round of coffees, "that are geared towards the long-term and do not force pre-emptive responses to short term investor pressures. This is the virtuous circle that, if it works, allows businesses to plan for the long term, and ensure consistency between these plans and short-term behaviour".
"We monitor how much of our stock is owned by hedge funds. Currently it is very low, around 5% of so. We think this is because we do not respond to the short term in ways that provide them with opportunities for shorting us. But this is not enough, there needs to be more and better rules governing hedge fund activities, we need to make sure they are forced more to be accountable for the fall out of their short term trading activities".
