Don't think of it as a problem with specific people. It's systemic. You tell a CEO that he gets paid primarily based on how much profit the company makes this quarter and he's going to start slashing long-term R&D and burning the office furniture for heat.

But you're asking why funds invest in companies like that or prefer that method of compensation. Part of it is just laziness. Investing in a company or rewarding a CEO who posts big profits seems intuitively sensible and is easy to measure. It's a lot more work to do the investigation it takes to realize they're going to crash and burn and you could be the one holding the bag.

Another factor is that fund managers are often compensated using the same methods. If the fund does well in the short term then they're rewarded. The companies dedicated to short-term profits do exactly that, as long as the market doesn't factor in the long-term value before you divest. But the bonus if it works goes to the fund manager whereas the risk is to other peoples' money.