ABSTRACT
Institutional investors have become one of the most important groups of shareholders holding more than 40% of global market capitalization (with much higher stakes in many Anglo-Saxon countries). Their presence on the Warsaw Stock Exchange (WSE) is also significant when compared with other markets in the CEE region. Institutional investors differ in many respects, including not only their types, but also investment strategies, which may affect the role they play as shareholders. One of the most important factors that differentiates institutional investors’ motivation for and ability to monitor their portfolio companies is their investment horizon. Many studies confirm that long-term institutional investors improve corporate governance as well as corporate performance and affect corporate financial decisions of their portfolio companies. The purpose of this study is to test whether long-term institutional ownership affects payout policies of companies listed on the WSE. For this reason, we measure institutional investor horizon for all institutional investors with at least a 5% stake in any non-financial company listed on the WSE in the years 2010–2019 in each year (using their portfolio turnovers). Our study reveals a significant positive relation between the institutional investor horizon and payout levels of non-financial companies.
