Institutional Investors’ Horizon and Equity-Financed Payouts
2021
Abstract Farre-Mensa, Michaely and Schmalz (2018) document that many firms issue new equity to finance their payouts to shareholders, despite the substantial cost of equity issuance. We find that equity-financed payouts are related to institutional investors’ horizon. Specifically, firms with a larger ownership by short-horizon institutions are more likely to have equity-financed discretionary payouts, and firms with equity-financed discretionary payouts tend to cut down their investments in the following years. Our results suggest that investor short-termism has significant effects on firms’ payout, financing and investment policies.
- Correction
- Source
- Cite
- Save
- Machine Reading By IdeaReader
40
References
0
Citations
NaN
KQI