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Cross-country determinants of institutional investors’ investment horizons

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  • Döring, Simon
  • Drobetz, Wolfgang
  • El Ghoul, Sadok
  • Guedhami, Omrane
  • Schröder, Henning

Abstract

Using a large dataset of firms from 35 countries, we study the country-level determinants of institutional investors’ investment horizons. We show that an equity investor-friendly institutional environment is more important for long-term investors, while short-term investors seem to be less concerned about the quality of the financial and legal environment. Beyond the financial and legal structure, the cultural environment and economic policy uncertainty in a country are other important determinants of investor horizons. These findings improve our understanding of cross-country differences in the corporate governance role, i.e., engagement vs. exit, of institutional investors.

Suggested Citation

  • Döring, Simon & Drobetz, Wolfgang & El Ghoul, Sadok & Guedhami, Omrane & Schröder, Henning, 2021. "Cross-country determinants of institutional investors’ investment horizons," Finance Research Letters, Elsevier, vol. 39(C).
    • Handle: RePEc:eee:finlet:v:39:y:2021:i:c:s1544612320304517
    DOI: 10.1016/j.frl.2020.101641
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