Stock Market Reactions to Long-Term Plans Measured for First Time

NEW YORK–(BUSINESS WIRE)–Institutional investors act when they hear how companies will create
value over the long-term. In a new study, The
Economic Significance of Long-Term Plans
published by KKS
and CECP’s Strategic
Investors Initiative
(SII), an abnormal change in market
returns and an increase in trade volume is observed after that company’s
CEO presented a long-term plan to institutional investors. This is the
first time the reaction to a CEO-presented long-term plan has been
quantified and is early evidence that the audience of institutional
investors find the information in these presentations decision-relevant.

“This research answers the question ‘If a CEO presents a long-term plan,
do investors care?’,” said George Serafeim, Professor of Business
Administration at Harvard Business School, co-founder of KKS
, and a co-author of the study. “The evidence from this
research demonstrates that investors value the information in these
plans, giving CEOs further incentive to create and disclose high-quality
long-term plans. This will help mobilize capital markets and reorient
them for the long-term.”

The study examined 21 plans presented by CEOs at CEO Investor Forums,
scored the CEO presentations against 22 measures of content and quality,
and examined the market’s reactions over a three- to five-day window
after the plans were presented. For both stock prices and trading
volumes, the delivery of long-term plans is associated with abnormal
market returns of 1.83% and share turnover (volume) of 7.6%.

Companies whose senior leaders communicated plans with higher-quality
information are linked to larger capital market reactions
. The data
did not show significant difference in analyst revisions of their
forecasts, which the authors note is consistent with sell-side analysts
being primarily focused on short-term financial results.

“CECP launched the Strategic Investor Initiative because investors said
CEOs are too short-term oriented and 86% of CEOs agreed,” said Daryl
Brewster, CEO, CECP: The CEO Force for Good
. “They wanted a platform
to reach long-term investors. For CEOs who want to attract investors
versus merely traders, CECP now has a proven platform to tell their
long-term story.”

The presentations included in the study were delivered at SII’s CEO
Investor Forums,
which provides a platform for CEOs to tell their
authentic long-term value story to long-term institutional investors. In
addition to the 9 themes in the study, successful long-term plans also
draw from the 7 question in the Strategic Investor Initiative’s Investor
to CEOs signed by Vanguard and other leading institutional
investors. More than 30 CEOs and senior leaders have delivered or
committed to deliver their company’s long-term plans at the Forums.
Together these CEOs represent more than $2 trillion in market
capitalization. The in-person audience for these presentations include
institutional investors that represent more than $25 trillion in assets
under management, as well as thousands who view the presentations live

According to the authors of the report, to deliver a high-quality
long-term plan, CEOs should touch upon the 22 topics summarized in 9
themes: Financial performance, Capital Allocations, Trends,
Competitive positioning, Risk and opportunities, Corporate governance,
Corporate purpose, Human capital, and Long-term value creation
Plans that detailed forward-looking metrics on these subjects were rated
higher than plans that disclosed backward looking data or were limited
to boilerplate language.

“The nine themes developed in this white paper offer a framework for
CEOs to use in developing their long-term plans,” said Brian Tomlinson,
Research Director, Strategic Investor Initiative, CECP. “The CEOs who
have led the charge at our CEO Investor Forums have created a robust
portfolio of long-term plan presentations. This research project
provides a user-friendly guide to enable more CEOs to develop and
present decision-relevant long-term plans.” Tomlinson co-authored the
report along with Serafeim and the KKS Advisors team that
included Sakis Kotsantonis, Managing Partner; Christina
, Associate Consultant; and Bronagh Ward, Senior
Associate Consultant.

The team will present the paper during an upcoming webinar to be
held in partnership with FCLTGlobal and Ceres at 12:00
p.m. – 1:00 PM (ET), November 28, 2018. The webinar is free:

The next CEO
Investor Forum
will take place on February 25, 2019
at the Park Hyatt in New York City and will feature long-term plan
presentations from Steve Collis, CEO AmerisourceBergen; Robin
CEO, JetBlue; Mark Schneider, CEO, Nestlé; and Peter
Van Camp,
Executive Chairman of Equinix. Early access pricing
of $595 is available until December 31, 2018 and the $795 full-price
tickets are available until the event reaches capacity. Investors are
encouraged to register in advance by clicking
or referring to SII’s site:

The Economic Significance of Long-Term Plans report is available
for free on KKS Advisor’s web site
and on SII’s web site


CECP is a CEO-led coalition that believes that a company’s social
strategy — how it engages with key stakeholders including employees,
communities, investors, and customers —determines company success.
in 1999 by actor and philanthropist Paul Newman and other business
leaders to create a better world through business, CECP has grown to a
movement of more than 200 of the world’s largest companies that
represent $11.3 trillion in revenues, $23.8 billion in societal
investment, 17.4 million employees, and $15 trillion in assets under
management. CECP helps companies transform their social strategy by
providing customized connections and networking, counsel and support,
benchmarking and trends, and awareness building and recognition.


The Strategic
Investor Initiative
 (SII) is a coalition of leading
companies and investors committed to re-orienting capital markets toward
the long-term. SII convenes 
 to provide a venue for CEOs to share their
long-term strategic plans with audiences of long-term investors. Through
leading research, SII assists companies in developing and communicating
long-term plans that help inform the decisions of institutional


At KKS, we advise leading organizations on bold and effective
strategies that pave the way to a sustainable society. Formed with the
vision to reshape markets, we enable clients to create long-term value
through the integrated management of environmental, social and
governance factors. Applying our unique, research-backed approach, we
work with corporations, foundations, NGOs and investors on sustainable
strategies that deliver lasting impact. For more information, visit