Shareholder Investment Horizons and Payout Policy

38 Pages Posted: 19 Mar 2010 Last revised: 5 Sep 2010

See all articles by Armen Hovakimian

Armen Hovakimian

Baruch College - Zicklin School of Business

Guangzhong Li

Sun Yat-Sen Business School, Sun Yat-Sen University

Date Written: August 31, 2010

Abstract

We find that institutions with short and long investment horizons have different effects on corporate payout policy. Firms with higher long (short) term institutional holdings are more (less) likely to pay dividends and tend to have larger (smaller) dividend payouts. Although high long-term institutional holdings also lead to more and larger repurchases, long-term institutions tend to prefer dividends to repurchases. In contrast, short-term institutional investors prefer repurchases to dividends. Overall, the results are consistent with long-term institutional investors playing an important monitoring role and with short-term institutional investors trading on their short-term information.

Keywords: Institutional investors, Investment horizons, Payout policy

JEL Classification: G23, G35, G11

Suggested Citation

Hovakimian, Armen and Li, Guangzhong, Shareholder Investment Horizons and Payout Policy (August 31, 2010). Available at SSRN: https://ssrn.com/abstract=1571757 or http://dx.doi.org/10.2139/ssrn.1571757

Armen Hovakimian

Baruch College - Zicklin School of Business ( email )

One Bernard Baruch Way
Box B10-225
New York, NY 10010
United States
646-312-3490 (Phone)
646-312-3451 (Fax)

HOME PAGE: http://zicklin.baruch.cuny.edu/faculty-profile/armen-hovakimian/

Guangzhong Li (Contact Author)

Sun Yat-Sen Business School, Sun Yat-Sen University ( email )

135 Xingang Xi Road
Guangzhou, Guangdong 510275
China

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