Stakeholder-oriented corporate investment: A catering perspective

Leilei Gu and Huilin Zhang

Finance Research Letters, 2022, vol. 48, issue C

Abstract: Exploring the staggered adoption of state constituency statutes as quasi-exogenous shocks, we find that enforcement of stakeholder orientation encourages corporate investment, especially for younger and more opaque firms, which is consistent with the top-down theory of capital budgeting of Almazan et al. (2017). Our evidence suggests that corporate insiders have a catering motive in investment decisions: to convey favorable information to stakeholders through increasing capital investments.

Keywords: Stakeholder orientation; Corporate investment; Quasi-exogenous shock; Catering (search for similar items in EconPapers)
JEL-codes: G31 G34 G38 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:48:y:2022:i:c:s1544612322001428

DOI: 10.1016/j.frl.2022.102863

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