Temporal Misalignment (Capital Markets)

Definition

The structural gap between market evaluation cycles (quarters) and real value creation timelines (years to decades). Creates systematic underinvestment in long-term projects and pressure to prioritize short-term metrics. See also: Temporal Misalignment (PPP) for public-private partnerships context.

Formula

Example

Pharmaceutical R&D takes 15 years but markets evaluate quarterly. Misalignment coefficient = 60×. This creates pressure to cut long-term research for short-term earnings.

Source

RCM Section 2.1