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Why do large shareholders adopt a short‐term versus a long‐term investment horizon in different firms?

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  • Onur Kemal Tosun

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.

Suggested Citation

  • Onur Kemal Tosun, 2019. "Why do large shareholders adopt a short‐term versus a long‐term investment horizon in different firms?," The Financial Review, Eastern Finance Association, vol. 54(4), pages 763-800, November.
    • Handle: RePEc:bla:finrev:v:54:y:2019:i:4:p:763-800
    DOI: 10.1111/fire.12198
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    Cited by:

    1. Stepanova, A. & Podukhovich, D., 2023. "CEO decision-making horizon and R&D investments. Evidence from Russia," Journal of the New Economic Association, New Economic Association, vol. 59(2), pages 85-118.
    2. Yi Jiang & Tingting Que & Miaomiao Yu, 2022. "Price asymmetries in the US airline industry," The Financial Review, Eastern Finance Association, vol. 57(4), pages 793-814, November.

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