Investment Horizons and Information

Journal of Business Finance and Accounting, Forthcoming

53 Pages Posted: 30 Aug 2013 Last revised: 21 Apr 2016

See all articles by Kershen Huang

Kershen Huang

Nova Southeastern University - H. Wayne Huizenga School of Business & Entrepreneurship

Alex Petkevich

University of Denver

Date Written: April 20, 2016

Abstract

We examine the relation between institutions' investment horizons on firms' financing and investment decisions. Firms with larger short-term institutional ownership use less debt financing and invest more in corporate liquidity. In contrast, firms with larger long-term institutional ownership use more internal funds, less external equity financing, and preserve investments in long-term assets. These results are primarily driven by the variation in informational preferences of different institutions. We argue that short-term (long-term) institutions collect and use value-neutral (value-enhancing) information.

Keywords: Institutions, investment horizons, corporate policies, information

JEL Classification: G32, G34

Suggested Citation

Huang, Kershen and Petkevich, Alex, Investment Horizons and Information (April 20, 2016). Journal of Business Finance and Accounting, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2316998 or http://dx.doi.org/10.2139/ssrn.2316998

Kershen Huang (Contact Author)

Nova Southeastern University - H. Wayne Huizenga School of Business & Entrepreneurship ( email )

3300 S. University Drive
Fort Lauderdale, FL 33328-2004
United States

HOME PAGE: http://bit.ly/kershenhuang

Alex Petkevich

University of Denver ( email )

2101 S. University Blvd.
Denver, CO 80208-8921
United States

HOME PAGE: http://https://sites.google.com/view/alexpetkevich/home

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