Investor Horizons and Corporate Policies

Derrien, François; Thesmar, David; Kecskés, Ambrus

doi:10.2139/ssrn.1491638

Cited by 40 publications

(64 citation statements)

References 22 publications

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“…Derrien, Kecskés and Thesmar () report that, in undervalued firms with long‐term investors, managers choose to make larger investments, increase the issuance of new equity and decrease shareholder payouts. These findings highlight the importance of the existence of investors with long‐term interests in the firm, which encourages managerial decisions that can boost firm value in the long term.…”

Section: Literature Reviewmentioning

confidence: 99%

The Impact of Investor Horizon on Say‐on‐Pay Voting

Stathopoulos

Voulgaris

2016

British J of Management

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Shareholder investment horizons have a significant impact on say‐on‐pay voting patterns. Short‐term investors are more likely to avoid expressing opinion on executive pay proposals by casting an abstaining vote. They vote against board proposals on pay only in cases where the CEO already receives excessive pay levels. In contrast, long‐term investors typically cast favourable votes. According to our findings, this is due to effective monitoring rather than collusion with the management. Overall, investor heterogeneity in terms of investment horizons helps explain say‐on‐pay voting, in particular the low levels of say‐on‐pay dissent, which have recently raised questions over the efficiency of this corporate governance mechanism.

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Section: Literature Reviewmentioning

confidence: 99%

The Impact of Investor Horizon on Say‐on‐Pay Voting

Stathopoulos

Voulgaris

2016

British J of Management

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“…This notable increase in visibility of institutional investors has drawn much attention from academicians, practitioners, and policymakers 1 . Recent studies show, however, that institutional investors exhibit significant heterogeneity and that investment horizon preference is one of the main dimensions that institutional investors differ across (e.g., Derrien, Kecskes, & Thesmar, ; Gaspar, Massa, & Matos, ). The present study examines whether and how institutional investment horizon matters to corporate social responsibility (CSR).…”

Section: Introductionmentioning

confidence: 99%

It's About Time! The Influence of Institutional Investment Horizon on Corporate Social Responsibility

Boubaker¹,

Chourou²,

Himick³

et al. 2017

Thunderbird Intl Bus Rev

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The US equity market has witnessed the rising power of institutional investors over the past three decades. Yet even as these institutional owners become more powerful, their effect on corporate social responsibility (CSR) still remains unclear. The present study attempts to fill this gap by examining these investors’ influence on CSR along the dimension of investor time horizon. We find robust evidence that ownership by institutional investors with long investment horizons is positively associated with higher CSR scores, while ownership by institutional investors with short investment horizons is either negatively or not significantly associated with CSR scores. The same results hold when we consider ownership by public pension funds, which present a unique case in which a theoretically long‐term horizon has recently been questioned, due to pressures toward short‐termism. Granger causality tests also show that the direction of the observed effects goes from institutional ownership to CSR and not the opposite. © 2017 Wiley Periodicals, Inc.

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“…More recently, studies address the sophisticated nature of institutions through differentiating them along multiple dimensions. We also contribute to the growing literature regarding the effect of institutional investments on management discipline (Chung et al, 2002;Helwege et al, 2012) and on firm-level choices (Chang et al, 2012;Gaspar et al, 2012;Harford et al, 2012) and pricing (Derrien et al, 2013) of policies. We view this argument from a different angle: Institutional investors are overall informed, but they are informed differently among themselves.…”

Section: Introductionmentioning

confidence: 99%

Investment Horizons and Information

Huang

Petkevich

2016

Business Fin & Account

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We examine the relation between institutions' investment horizons on firms' financing and investment decisions. Firms with larger short‐term institutional ownership use less debt financing and invest more in corporate liquidity. In contrast, firms with larger long‐term institutional ownership use more internal funds, less external equity financing, and preserve investments in long‐term assets. These results are primarily driven by the variation in informational preferences of different institutions. We argue that short‐term (long‐term) institutions collect and use value‐neutral (value‐enhancing) information.

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Investor Horizons and Corporate Policies

Cited by 40 publications

References 22 publications

The Impact of Investor Horizon on Say‐on‐Pay Voting

The Impact of Investor Horizon on Say‐on‐Pay Voting

It's About Time! The Influence of Institutional Investment Horizon on Corporate Social Responsibility

Investment Horizons and Information

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