The quarterly reporting process does put perverse incentives on the CEO that cascade through the company. I've seen it first-hand. To meet the shareholders' sho

The quarterly reporting process does put perverse incentives on the CEO that cascade through the company. I've seen it first-hand. To meet the shareholders' shortsighted demands for steady growth and accurate short-term budget forecasts, the corporate budgeting process is a top-down bureaucratic affair that emphasizes predictability at the expense of long-term profits. If a small department has a great set of low-risk, high-reward projects, but runs out of budget, the company should run the project so long as the risk-adjusted reward is greater than the cost of capital. But instead, they must stick to the plan.