Institutional investment horizons in Türkiye: The role of economic factors

This study examines the relationship between institutional investment horizons, macroeconomic factors, and firm-specific factors in Türkiye. We hypothesize that greater macroeconomic stability encourages longer investment horizons, whereas greater economic uncertainty encourages shorter investment horizons. Consistent with our hypothesis, we find that the institutional investment horizon is negatively related to stock market volume, inflation, the foreign exchange rate, and gross domestic product (GDP) growth. The horizon increases with real interest rates, unemployment, stock market returns, and the quality of external governance mechanisms. At the firm level, the institutional investment horizon is higher for firms with higher institutional investment, higher revenue, higher risk, a larger board, higher executive diversity, smaller size, lower dividends, lower liquidity, lower profitability, younger age, and lower board independence. Further, long- and short-horizon investors have similar relationships with foreign exchange rates, real interest rates, and GDP growth. But they respond differently to increases in inflation and unemployment rates.