Graduation Year

2011

Document Type

Dissertation

Degree

Ph.D.

Degree Granting Department

Finance

Major Professor

Christos Pantzalis

Co-Major Professor

Ninon Sutton

Keywords

Dividends, Investment policy, Liquidity, Payout policy, R&D, Share repurchases

Abstract

Institutional investors influence corporate payout and research and development (R&D) investment policies. Higher payouts are encouraged by institutional investors, especially in firms with high free cash flow and poor investment opportunities. They also positively influence stock repurchases, particularly in firms with high information asymmetry. The substitution of stock repurchases for dividends as a percentage of total payout is encouraged by institutional investors. Institutional owners persuade firm management to increase research and development (R&D) investment overall and specifically in firms with higher stock liquidity, higher information asymmetry, lower free cash flow, and better investment opportunities. Institutional investors decrease agency costs in payout and R&D investment policy decisions.

Share

COinS