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.
| Original language | English |
|---|---|
| Pages (from-to) | 1017-1056 |
| Number of pages | 40 |
| Journal | Journal of Business Finance and Accounting |
| Volume | 43 |
| Issue number | 7-8 |
| DOIs | |
| State | Published - May 1 2016 |
| Externally published | Yes |
Bibliographical note
Publisher Copyright:© 2016 John Wiley & Sons Ltd
ASJC Scopus Subject Areas
- Accounting
- Business, Management and Accounting (miscellaneous)
- Finance
Keywords
- corporate policies
- information
- institutions
- investment horizons
Disciplines
- Business
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