Investor Horizons and Corporate Policies

Abstract : This paper looks at the effect of shareholder horizon on corporate behavior. In perfect capital markets, corporate behavior should be insensitive to shareholder horizon, but when investment opportunities are not well valued by the market, shareholder horizon matters. We first present a simple framework to show that shareholder horizon should be looked at in conjunction with stock misvaluation. We build on this insight to design a novel empirical strategy to assess the impact of investor short-termism. Consistent with our simple framework, we find that, when a firm is undervalued, the presence of more short-term investors is associated with bigger shareholder payout, less equity issue, less external financing, and as a result, less investment and less R&D spending. Under our interpretation, long-term investors are not more involved in corporate governance, yet, they affect corporate policy.
Type de document :
Rapport
2012
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https://hal-hec.archives-ouvertes.fr/hal-00696602
Contributeur : Amaury Bouvet <>
Soumis le : samedi 12 mai 2012 - 15:58:42
Dernière modification le : jeudi 11 janvier 2018 - 06:19:32

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  • HAL Id : hal-00696602, version 1

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François Derrien, Ambrus Kecskes, David Thesmar. Investor Horizons and Corporate Policies. 2012. 〈hal-00696602〉

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