Suchergebnisse

AbstractIn this study, we examine the differences in Investment, Employment, and Share repurchase sensitivities to uncertainty between firms with varying investor horizons. We test for these effects using two macro‐based uncertainty measures (Baker et al., 2016; Ahir et al., 2018). The results show that in uncertainty times, greater short‐term investor ownership is associated with less investment and hiring, and more net share buybacks. These findings are consistent with the preference of short‐horizon investors of seeking to divest in the near future, thus, wanting to maximize current stock prices.

AbstractModern economies sometimes produce potentially transformative innovations whose development and implementation involves large amounts of capital. Often, the required initial investments are fraught with uncertainty, and there is a scarcity of objective information that would help interested investors to predict success. How, in this situation, do investors form subjective beliefs about prospective returns? This paper explores the role of competing, specialized financial intermediaries that are incentivized to steer capital either towards or away from a potentially transformative innovation. We develop a model in which investors' subjective beliefs arise from a competitive campaign game, or belief contest, between two financial intermediaries. We discuss how a financial regulator—who does not possess superior information—may influence the contest outcome in favour of impartial beliefs, away from exuberant or overly pessimistic ones.