Abstract
Exploring the staggered adoption of state constituency statutes as quasi-exogenous shocks, we find that enforcement of stakeholder orientation encourages corporate investment, especially for younger and more opaque firms, which is consistent with the top-down theory of capital budgeting of Almazan et al. (2017). Our evidence suggests that corporate insiders have a catering motive in investment decisions: to convey favorable information to stakeholders through increasing capital investments.
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