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    Rights statement: This is the author’s version of a work that was accepted for publication in Journal of Corporate Finance. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Corporate Finance, 64, 2020 DOI: 10.1016/j.jcorpfin.2020.101634

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Institutional Investors’ Horizons and Corporate Employment Decisions

Research output: Contribution to journalJournal articlepeer-review

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Institutional Investors’ Horizons and Corporate Employment Decisions. / Ghaly, Mohamed; Anh Dang, Viet; Stathopoulos, Konstantinos .

In: Journal of Corporate Finance, Vol. 64, 101634, 01.10.2020.

Research output: Contribution to journalJournal articlepeer-review

Harvard

Ghaly, M, Anh Dang, V & Stathopoulos, K 2020, 'Institutional Investors’ Horizons and Corporate Employment Decisions', Journal of Corporate Finance, vol. 64, 101634. https://doi.org/10.1016/j.jcorpfin.2020.101634

APA

Ghaly, M., Anh Dang, V., & Stathopoulos, K. (2020). Institutional Investors’ Horizons and Corporate Employment Decisions. Journal of Corporate Finance, 64, [101634]. https://doi.org/10.1016/j.jcorpfin.2020.101634

Vancouver

Ghaly M, Anh Dang V, Stathopoulos K. Institutional Investors’ Horizons and Corporate Employment Decisions. Journal of Corporate Finance. 2020 Oct 1;64. 101634. https://doi.org/10.1016/j.jcorpfin.2020.101634

Author

Ghaly, Mohamed ; Anh Dang, Viet ; Stathopoulos, Konstantinos . / Institutional Investors’ Horizons and Corporate Employment Decisions. In: Journal of Corporate Finance. 2020 ; Vol. 64.

Bibtex

@article{177e38458f35488d9545175221bbc9b1,
title = "Institutional Investors{\textquoteright} Horizons and Corporate Employment Decisions",
abstract = "Monitoring by long-term investors should reduce agency conflicts in firms{\textquoteright} labor investment choices. Consistent with this argument, we find that abnormal net hiring, measured as the absolute deviation from optimal net hiring predicted by economic fundamentals, decreases in the presence of institutional investors with longer investment horizons. Firms dominated by long-term shareholders reduce both over-investment (over-hiring and under-firing) and under-investment (under-hiring) in employees. The monitoring role of long-term investors is stronger for firms facing higher labor adjustment costs both in absolute terms and relative to capital adjustment costs, and those for which human capital is regarded as more important. The effect is also more pronounced for firms that have stronger incentives and/or more opportunities to deviate from expected net hiring. We address endogeneity concerns by exploiting exogenous changes to long-term institutional ownership resulting from annual reconstitutions of the Russell indexes.",
author = "Mohamed Ghaly and {Anh Dang}, Viet and Konstantinos Stathopoulos",
note = "This is the author{\textquoteright}s version of a work that was accepted for publication in Journal of Corporate Finance. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Corporate Finance, 64, 2020 DOI: 10.1016/j.jcorpfin.2020.101634",
year = "2020",
month = oct,
day = "1",
doi = "10.1016/j.jcorpfin.2020.101634",
language = "English",
volume = "64",
journal = "Journal of Corporate Finance",
issn = "0929-1199",
publisher = "Elsevier",

}

RIS

TY - JOUR

T1 - Institutional Investors’ Horizons and Corporate Employment Decisions

AU - Ghaly, Mohamed

AU - Anh Dang, Viet

AU - Stathopoulos, Konstantinos

N1 - This is the author’s version of a work that was accepted for publication in Journal of Corporate Finance. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Corporate Finance, 64, 2020 DOI: 10.1016/j.jcorpfin.2020.101634

PY - 2020/10/1

Y1 - 2020/10/1

N2 - Monitoring by long-term investors should reduce agency conflicts in firms’ labor investment choices. Consistent with this argument, we find that abnormal net hiring, measured as the absolute deviation from optimal net hiring predicted by economic fundamentals, decreases in the presence of institutional investors with longer investment horizons. Firms dominated by long-term shareholders reduce both over-investment (over-hiring and under-firing) and under-investment (under-hiring) in employees. The monitoring role of long-term investors is stronger for firms facing higher labor adjustment costs both in absolute terms and relative to capital adjustment costs, and those for which human capital is regarded as more important. The effect is also more pronounced for firms that have stronger incentives and/or more opportunities to deviate from expected net hiring. We address endogeneity concerns by exploiting exogenous changes to long-term institutional ownership resulting from annual reconstitutions of the Russell indexes.

AB - Monitoring by long-term investors should reduce agency conflicts in firms’ labor investment choices. Consistent with this argument, we find that abnormal net hiring, measured as the absolute deviation from optimal net hiring predicted by economic fundamentals, decreases in the presence of institutional investors with longer investment horizons. Firms dominated by long-term shareholders reduce both over-investment (over-hiring and under-firing) and under-investment (under-hiring) in employees. The monitoring role of long-term investors is stronger for firms facing higher labor adjustment costs both in absolute terms and relative to capital adjustment costs, and those for which human capital is regarded as more important. The effect is also more pronounced for firms that have stronger incentives and/or more opportunities to deviate from expected net hiring. We address endogeneity concerns by exploiting exogenous changes to long-term institutional ownership resulting from annual reconstitutions of the Russell indexes.

U2 - 10.1016/j.jcorpfin.2020.101634

DO - 10.1016/j.jcorpfin.2020.101634

M3 - Journal article

VL - 64

JO - Journal of Corporate Finance

JF - Journal of Corporate Finance

SN - 0929-1199

M1 - 101634

ER -