Institutional investor horizon and bank risk-taking
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Pathan, S. and Haq, M. and Faff, R. and Seymour, T. 2021. Institutional investor horizon and bank risk-taking. Journal of Corporate Finance. 66: Article No. 101794.
Journal of Corporate Finance
Faculty of Business and Law
School of Accounting, Economics and Finance
Funding and Sponsorship
We test the effect of short-term versus long-term institutional shareholding –so-called investor horizon– on bank risk-taking. We find that in contrast to banks dominated by short-term shareholders, banks with greater long-term shareholding are associated with lower risk, better stock performance, and conservative business and compensation policies. Our results imply that bank regulators should be more vigilant over the actions of banks that heavily rely on short-term shareholding.
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