Financial Regulations

Ms. Clinton’s Chimera

Specialists Dilip Patel, foreground left, and Patrick Murphy, foreground right, work on the floor of the New York Stock Exchange, Monday, Oct. 17, 2016. Stocks are opening slightly lower on Wall Street, led by a decline in health care stocks. (AP Photo/Richard Drew)
Stock trading has come under scrutiny.
  • Why it matters

    Why it matters

    Concerns about how financial markets impact corporate decisions could elicit new regulations from the next U.S. president

  • Facts

    Facts

    • Some politicians and economists say corporate America is too focused on short-term results, hurting investments in research and development and limiting long-term growth.
    • Both the Democratic presidential candidate Hillary Clinton as well as her Republican counterpart Donald Trump have proposed policies to address short-termism.
    • Ms. Clinton has proposed to use the capital gains tax to encourage shareowners to hold on to their stock for a longer time.
  • Audio

    Audio

  • Pdf

An often-heard refrain, increasingly voiced in US politics, is that corporate America is excessively influenced by short-term stock-market considerations.

While the U.S. presidential election is not particularly focused on policy at the moment, the campaign will soon end, at which point people will govern and policies will be adopted. Given that both Republicans and Democrats have criticized short-termism, it is possible that some of those policies might aim to address it. They are unlikely to make any difference.

Not only has the problem of short-termism been woefully exaggerated, but the policy proposals for addressing it are severely lacking.

Consider Democratic presidential nominee Hillary Clinton’s proposal – which Vice President Joe Biden has endorsed – to use the capital gains tax to encourage shareowners to hold on to their stock for a longer time.

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