Why Do Large Shareholders Adopt a Short‐Term Versus a Long‐Term Investment Horizon in Different Firms?

38 Pages Posted: 20 May 2020

See all articles by Onur Kemal Tosun

Onur Kemal Tosun

Cardiff Business School - Accounting and Finance Section

Date Written: November 2019

Abstract

I ask why the same large shareholders have different investment horizons. Using data for 1998–2013, I examine four fundamental firm policies for their potential influence on blockholders’ investments with different time horizons. The panel ordinary least squares, difference‐in‐difference (using the Sarbanes‐Oxley Act), logistic, and dynamic generalized method of moments regression analyses reveal that blockholders adopt a short‐term horizon in smaller firms with a less independent board, high leverage, and high dividends while the same blockholders keep their investments longer in firms with a more independent board and low dividends. Under various economic conditions, different firm characteristics gain importance in blockholders’ decision on short‐term versus long‐term investments.

Keywords: blockholders, firm policies, long‐term investment, short‐term investment

JEL Classification: C23, G11, G32

Suggested Citation

Tosun, Onur Kemal, Why Do Large Shareholders Adopt a Short‐Term Versus a Long‐Term Investment Horizon in Different Firms? (November 2019). Financial Review, Vol. 54, Issue 4, pp. 763-800, 2019, Available at SSRN: https://ssrn.com/abstract=3601149 or http://dx.doi.org/10.1111/fire.12198

Onur Kemal Tosun (Contact Author)

Cardiff Business School - Accounting and Finance Section ( email )

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