How the capital market affects firm strategy

CEIBS Professor of Management Yu Zhang's research looks at the interaction between the capital market and firm strategy in terms of how capital markets influence the strategic decisions made by companies and their managers, and how it shapes the way they compete with other firms. Here he explains some of his findings, which show that in almost all industries – whether it’s in the US or in China, developed or developing countries – the pressure to meet or beat analysts’ forecasts or earnings pressure is causing managers to engage in more short-term-oriented behaviour which creates problems for firms to really perform well in the long-term.