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Stakeholder-oriented corporate investment: A catering perspective

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  • Gu, Leilei
  • Zhang, Huilin

Abstract

Exploring the staggered adoption of state constituency statutes as quasi-exogenous shocks, we find that enforcement of stakeholder orientation encourages corporate investment, especially for younger and more opaque firms, which is consistent with the top-down theory of capital budgeting of Almazan et al. (2017). Our evidence suggests that corporate insiders have a catering motive in investment decisions: to convey favorable information to stakeholders through increasing capital investments.

Suggested Citation

  • Gu, Leilei & Zhang, Huilin, 2022. "Stakeholder-oriented corporate investment: A catering perspective," Finance Research Letters, Elsevier, vol. 48(C).
    • Handle: RePEc:eee:finlet:v:48:y:2022:i:c:s1544612322001428
    DOI: 10.1016/j.frl.2022.102863
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    More about this item

    Keywords

    Stakeholder orientation; Corporate investment; Quasi-exogenous shock; Catering;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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