Abstract

http://ssrn.com/abstract=1491638
 
 

References (43)



 
 

Citations (9)



 


 



Investor Horizons and Corporate Policies


François Derrien


HEC Paris - Finance Department

David Thesmar


HEC Paris - Finance Department

Ambrus Kecskes


York University - Schulich School of Business

June 27, 2012

Journal of Financial and Quantitative Analysis (JFQA), Forthcoming

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.

Number of Pages in PDF File: 52

Keywords: Investor horizons, Institutional investors, Investment, Financing, Payouts, Mispricing, Market timing

JEL Classification: G23, G31, G32, G35

Accepted Paper Series


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Date posted: October 21, 2009 ; Last revised: March 9, 2013

Suggested Citation

Derrien, François and Thesmar, David and Kecskes, Ambrus, Investor Horizons and Corporate Policies (June 27, 2012). Journal of Financial and Quantitative Analysis (JFQA), Forthcoming. Available at SSRN: http://ssrn.com/abstract=1491638 or http://dx.doi.org/10.2139/ssrn.1491638

Contact Information

François Derrien
HEC Paris (Groupe HEC) - Finance Department ( email )
1 rue de la Liberation
Jouy-en-Josas Cedex, 78351
France
33 1 39 67 72 98 (Phone)
HOME PAGE: http://www.hec.fr/derrien

David Thesmar (Contact Author)
HEC Paris (Groupe HEC) - Finance Department ( email )
1 rue de la Liberation
Jouy-en-Josas Cedex, 78351
France
+33 1 39 67 94 12 (Phone)
HOME PAGE: http://www.hec.fr/hec/eng/professeurs_recherche/p_liste/p_fiche.php?num=135

Ambrus Kecskes
York University - Schulich School of Business ( email )
4700 Keele Street
Toronto, Ontario M3J 1P3
Canada
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