Institutional investor horizons, information environment, and firm financing decisions
We provide evidence that the investment horizons of institutional shareholders affect firms’ financing decisions. We find that short-term institutional ownership positively affects firms’ likelihood of equity relative to debt issues, the size of equity issues, and the likelihood of long-term relativ...
| Main Authors: | , , , |
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| Other Authors: | |
| Format: | Journal Article |
| Language: | English |
| Published: |
2024
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| Subjects: | |
| Online Access: | https://hdl.handle.net/10356/180345 |
| _version_ | 1826121568889077760 |
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| author | Chang, Xin Chen, Yangyang Fu, Kangkang Yang, Endong |
| author2 | Nanyang Business School |
| author_facet | Nanyang Business School Chang, Xin Chen, Yangyang Fu, Kangkang Yang, Endong |
| author_sort | Chang, Xin |
| collection | NTU |
| description | We provide evidence that the investment horizons of institutional shareholders affect firms’ financing decisions. We find that short-term institutional ownership positively affects firms’ likelihood of equity relative to debt issues, the size of equity issues, and the likelihood of long-term relative to short-term debt issues. Firms held more by short-term institutions have lower financial leverage and longer debt maturities. These results suggest that short-horizon institutions, backed by buy-side research, improve the transparency of the information environment, which allows firms to issue more information-sensitive securities. Our findings suggest that institutional investor horizons influence firms’ financing decisions by shaping their information environment. |
| first_indexed | 2025-03-09T13:00:38Z |
| format | Journal Article |
| id | ntu-10356/180345 |
| institution | Nanyang Technological University |
| language | English |
| last_indexed | 2025-03-09T13:00:38Z |
| publishDate | 2024 |
| record_format | dspace |
| spelling | ntu-10356/1803452024-10-02T05:20:42Z Institutional investor horizons, information environment, and firm financing decisions Chang, Xin Chen, Yangyang Fu, Kangkang Yang, Endong Nanyang Business School Business and Management Investor horizons Information asymmetry We provide evidence that the investment horizons of institutional shareholders affect firms’ financing decisions. We find that short-term institutional ownership positively affects firms’ likelihood of equity relative to debt issues, the size of equity issues, and the likelihood of long-term relative to short-term debt issues. Firms held more by short-term institutions have lower financial leverage and longer debt maturities. These results suggest that short-horizon institutions, backed by buy-side research, improve the transparency of the information environment, which allows firms to issue more information-sensitive securities. Our findings suggest that institutional investor horizons influence firms’ financing decisions by shaping their information environment. 2024-10-02T05:20:42Z 2024-10-02T05:20:42Z 2024 Journal Article Chang, X., Chen, Y., Fu, K. & Yang, E. (2024). Institutional investor horizons, information environment, and firm financing decisions. Journal of Contemporary Accounting and Economics, 20(1), 100397-. https://dx.doi.org/10.1016/j.jcae.2023.100397 1815-5669 https://hdl.handle.net/10356/180345 10.1016/j.jcae.2023.100397 2-s2.0-85181799032 1 20 100397 en Journal of Contemporary Accounting and Economics © 2023 Elsevier Ltd. All rights reserved. |
| spellingShingle | Business and Management Investor horizons Information asymmetry Chang, Xin Chen, Yangyang Fu, Kangkang Yang, Endong Institutional investor horizons, information environment, and firm financing decisions |
| title | Institutional investor horizons, information environment, and firm financing decisions |
| title_full | Institutional investor horizons, information environment, and firm financing decisions |
| title_fullStr | Institutional investor horizons, information environment, and firm financing decisions |
| title_full_unstemmed | Institutional investor horizons, information environment, and firm financing decisions |
| title_short | Institutional investor horizons, information environment, and firm financing decisions |
| title_sort | institutional investor horizons information environment and firm financing decisions |
| topic | Business and Management Investor horizons Information asymmetry |
| url | https://hdl.handle.net/10356/180345 |
| work_keys_str_mv | AT changxin institutionalinvestorhorizonsinformationenvironmentandfirmfinancingdecisions AT chenyangyang institutionalinvestorhorizonsinformationenvironmentandfirmfinancingdecisions AT fukangkang institutionalinvestorhorizonsinformationenvironmentandfirmfinancingdecisions AT yangendong institutionalinvestorhorizonsinformationenvironmentandfirmfinancingdecisions |