افق های سرمایه گذاری سهامدار و تامین مالی بدهی بانک
Abstract
1- Introduction
2- Hypothesis development
3- Data and variables
4- Empirical results
5- Robustness tests
6- Effects of shareholder investment horizons on other aspects of debt structure
7- Conclusion
Appendix B. Supplementary materials
Appendix A. Variable descriptions
References
Abstract
This paper investigates the impact of institutional shareholder investment horizons on a firm’s use of bank debt. We find that short-term institutional ownership of the borrowing firm has a negative effect on bank debt financing. This finding provides evidence consistent with the monitoring avoidance incentives of short-term shareholders. In contrast, long-term institutional ownership has a positive impact on the firm’s reliance on bank debt financing. These effects are attenuated by higher managerial ownership and more motivated investors and are exacerbated by higher information opacity. Our results are robust to potential endogeneity concerns, the potential use of bonds, firm size effects, and alternative measures of investment horizon. Investigating the effects of investment horizons on other aspects of debt corroborates our main findings.
Introduction
Debt financing is an important source of funding for U.S. corporations. Firms can raise debt from arm’s-length investors, such as public bondholders, or from financial intermediaries, such as banks. Previous studies illustrate the relative benefits and costs of using bank debt as opposed to public debt (e.g. Diamond, 1984; Boyd and Prescott, 1986; Fama, 1985; Rajan, 1992; Chemmanur and Fulghieri, 1994). A few papers also explore firm characteristics, such as growth opportunities (Houston and James, 1996), credit quality (Denis and Mihov, 2003), corporate social capital (Hasan et al., 2017), or control-ownership divergence (Lin et al., 2013) as factors influencing a firm’s amount of bank debt. The impact of shareholder investment horizons on a firm’s use of bank debt, however, has not been explored in the literature. This study fills this void by investigating the association between institutional shareholder investment horizons and a firm’s percentage of debt held by banks using a comprehensive sample of U.S. firms from 1990 to 2015.
Institutional investors, who are more sophisticated than individual investors (Baghdadi et al., 2018; Yang et al., 2016; Prevost et al., 2016), are now the major owners of U.S. firms1; however, these investors are far from homogenous (Hotchkiss and Strickland, 2003; Ferreira et al., 2017). One important dimension by which they differ is the length of their investment horizons.2 This difference is economically important because institutional investors with short-term horizons have less incentive to spend resources on monitoring since they are less likely to invest long enough to recoup the costs of their monitoring efforts (Gaspar et al., 2005; Chen et al., 2007).