Investor Horizons and Corporate Policies

Francois Derrien (), Ambrus Kecskes and David Thesmar
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Ambrus Kecskes: Schulich School of Business - York University [Toronto]

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Abstract: We study the effect of investor horizons on corporate behavior. We argue that longer investor horizons attenuate the effect of stock mispricing on corporate policies. Consistent with our argument, we find that when a firm is undervalued, greater long-term investor ownership is associated with more investment, more equity financing, and less payouts to shareholders. Our results do not appear to be explained by long-term investor self-selection, monitoring (corporate governance), or concentration (blockholdings). Our results are consistent with a version of market timing in which mispriced firms cater to the tastes of their short-term investors rather than their long-term investors.

Keywords: investor horizons; corporate policies (search for similar items in EconPapers)
Date: 2013-12
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Citations: View citations in EconPapers (59)

Published in Journal of Financial and Quantitative Analysis, 2013, 48 (06), pp.1755-1780. ⟨10.1017/S0022109013000628⟩

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Related works:
Journal Article: Investor Horizons and Corporate Policies (2013)
Working Paper: Investor Horizons and Corporate Policies (2012)
Working Paper: Investor Horizons and Corporate Policies (2010)
Working Paper: Investor Horizons and Corporate Policies (2010)
Working Paper: Investor Horizons and Corporate Policies (2010)
Working Paper: Investor Horizons and Corporate Policies (2010)
Working Paper: Investor Horizons and Corporate Policies (2010)
Working Paper: Investor Horizons and Corporate Policies (2010)
Working Paper: Investor Horizons and Corporate Policies (2010)
Working Paper: Investor Horizons and Corporate Policies (2010)
Working Paper: Investor Horizons and Corporate Policies (2010)
Working Paper: Investor Horizons and Corporate Policies (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01069196

DOI: 10.1017/S0022109013000628

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