Abstract:
In 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.