Investment Horizons and Information

Huang, Kershen; Petkevich, Alex

doi:10.1111/jbfa.12205

Cited by 13 publications

(8 citation statements)

References 103 publications

(175 reference statements)

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“…These results are consistent with our summary statistics as reported in Panels B to E of Table III, and are consistent with our main argument. They are also consistent with the findings of Huang and Petkevich (2016), but contradict the conclusions of Harford et al (2012).…”

Section: Regression Resultssupporting

confidence: 83%

Institutional investors, monitoring and corporate finance policies

Cleary

Wang

2017

IJMF

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Purpose The purpose of this paper is to examine the influence of institutional investors’ investment horizons (IIIH) on a wide variety of key corporate policies. Design/methodology/approach The authors perform regression analysis to a panel data set of quarterly financial statement data for US firms over the 1981-2014 using several measures of IIIH. Findings The authors argue that an increase in the presence of long-term investors contributes to more effective monitoring and information quality. This results in a reduction in agency costs and informational asymmetry problems for firms that are more heavily influenced by long-term investors, which in turn influences the corporate policies they pursue. Consistent with these arguments, the evidence suggests that firms with a greater long-term institutional investor base maintain lower investment outlays, higher dividend payments, lower levels of cash and higher levels of leverage. All results hold after controlling for potential endogeneity issues. Originality/value The authors show that a greater presence of long-term institutional investors leads to higher dividends, lower investment outlays, lower cash holdings and higher leverage. The comprehensive nature of the predictions with respect to overall corporate finance policies and the supporting evidence provided represents an important contribution, as previous studies have tended to focus on one specific area of corporate behavior (i.e. such as cash holdings).

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Section: Regression Resultssupporting

confidence: 83%

Institutional investors, monitoring and corporate finance policies

Cleary

Wang

2017

IJMF

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“…However, to alleviate possible endogeneity in our models, we employed the two-stage least squares (2SLS) technique with instrumental variables (IVs). This technique has been widely used in previous studies to alleviate endogeneity bias such as omitted variables, measurement error and reverse causality (AL-Qadasi et al, 2019;Chichernea et al, 2015;Chung et al, 2015;How et al, 2014;Huang & Petkevich, 2016). To identify the suitable IVs, we seek to find instruments that may influence institutional investors but not analysts' stock recommendations except indirectly through other independent variables.…”

Section: Endogeneity Testmentioning

confidence: 99%

“…To identify the suitable IVs, we seek to find instruments that may influence institutional investors but not analysts' stock recommendations except indirectly through other independent variables. Following previous studies, the selected instrument variables for (IO_TOTAL, IO_PRIV, and IO_GOVT) are dividends, systematic risk, and company size (Chichernea et al, 2015;Chung et al, 2015;How et al, 2014;Huang & Petkevich, 2016). Chichernea et al (2015) find that different institutional investors (short-term versus long-term) have different perferences towards dividends; we therefore use annual devidend per share (DVD) as proxy for company dividend.…”

Section: Endogeneity Testmentioning

confidence: 99%

Institutional investor heterogeneity and analyst recommendation: Malaysian evidence

Qasem

Aripin

Wan‐Hussin

et al. 2021

Cogent Business & Management

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This study investigates the association between institutional investors' ownership and sell-side analysts' stock recommendations in the context of the heterogeneous nature of institutional investors. Based on a sample of 281 Malaysian public listed companies over the period 2008-2013 (732 company-year observations), we find a significant positive relationship between institutional ownership, in particular ownership held by privately managed institutional investors and sell-side analysts' stock recommendations, but no significant relationship between state owned institutional investors and sell-side analysts' stock recommendations. This suggests that the relationship between institutional investors and analysts' stock recommendations are different among different types of institutional investor. Our results are robust to tests for potential endogeneity between institutional ownership and analysts' stock recommendations.

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“…Long-term institutional investors have different interests and preferences in the investee company. For instance, the heterogeneous influence of investors with different investment horizons is documented in regard to companies' fundamental policies such as financing policies and capital structure (e.g., [32][33][34]) and investment policies (e.g., [35,36]). Indeed, long-term institutional investors are more interested in companies' long-term performance, and, unlike short-term owners, they do not focus on short-term earnings.…”

Section: Long-term Institutional Ownershipmentioning

confidence: 99%

The Role of Long-Term Institutional Ownership in Sustainability Report Assurance: Global Evidence

Alomran

Alsahali

2023

Sustainability

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Focusing on the role of the institutional investment horizon as a monitoring mechanism that enhances companies’ sustainability reporting reliability, this study investigates the association between long-term ownership and companies’ decisions to assure their sustainability report. Further, the study examines the moderating effect of the quality of governance on this association. Consistent with the critical mass theory, the study argues that long-term ownership should reach a certain threshold to have an influence on companies’ assurance decisions. The study’s results support the argument and find that long-term ownership is positively and significantly associated with companies’ assurance decisions, and the association is positive and significant only for a high level of long-term ownership in comparison to low- and medium-level long-term ownership. Moreover, the study finds that the association between long-term ownership and assurance is negatively moderated by the quality of governance at both the company and country levels.

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Investment Horizons and Information

Cited by 13 publications

References 103 publications

Institutional investors, monitoring and corporate finance policies

Institutional investors, monitoring and corporate finance policies

Institutional investor heterogeneity and analyst recommendation: Malaysian evidence

The Role of Long-Term Institutional Ownership in Sustainability Report Assurance: Global Evidence

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