Do long-term investors improve corporate decision making?

We study the effect of investor horizons on a comprehensive set of corporate decisions. We argue that monitoring by long-term investors generates decision making that maximizes shareholder value. We find that long-term investors strengthen governance and restrain managerial misbehaviors such as earnings management and financial fraud. They discourage a range of investment and financing activities but encourage payouts. Innovation increases, in quantity and quality. Shareholders benefit through higher profitability that the stock market does not fully anticipate, and lower risk.

• Publication year

  2017

• Venue

  Journal of Corporate Finance

• Publication date

  2017-11-25

• Fields of study

  Business, Economics

• Identifiers
  DOI 10.2139/SSRN.2505261
• External record

  Open on Semantic Scholar

• Source metadata

  Semantic Scholar

• No claims are published for this paper.

• No concepts are published for this paper.

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