Meeting expectations without meeting their spirit: a lesson in market finance

Balancing the tension between independent leadership and external expectations requires managers at corporate entities to walk a unique tightrope that only they can see.

In recently published research, however, researchers point out that, since the 1980s, too many ‘successful’ American companies have eschewed internal exceptionalism (and any innovation and added value entailed) in favor of walking an all too predictable and obvious line drawn by outside analysts to the point where managers are sacrificing long term value in favor of immediate (and ultimately fleeting) public accolades, often to the detriment of the managers themselves.

A quick overview of the study: Caught in an Expectations Trap: Risks of Giving Securities Analysts What They Expect

In a study, management researchers Guilhem Bascle from UCLouvain in Belgium and Professor Jiwook Jung from the University of Illinois in the USA combined two samples of the largest, nonfinancial U.S. corporations to construct a panel data set that spans 30 years (1986–2015), covering the heyday of shareholder capitalism and the more recent years after the global financial crisis. Bascle and Jung randomly drew firms from 1986 to 2006 from…