Hedge fund investor activism and takeovers
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Author
Contributions
- Schor, Michael - Contributor
- Harvard Business School. Division of Research - Contributor
Publication
2007 - Division of Research, Harvard Business School, Boston, Massachusetts
Language
English
Word Count
12,500 words, Guess
Page Count
50 pages
Identifiers
- OCLC Control Number182946276
- Open LibraryOL48011519M
Description
We examine long-horizon stock returns around hedge fund activism in a comprehensive sample of 13D filings by portfolio investors between 1993 and 2006. Abnormal returns surrounding investor activism are high for the subset of targets that are acquired ex-post, but not detectably different from zero for targets that remain independent a year after the initial activist request. Announcement returns show a similar pattern. Firms that are targeted by activists are more likely to get acquired than those in a control sample. We argue that the combination of hedge funds' short investment horizons and their large positions in target firms makes M&A the only attractive exit option. The results also suggest that hedge funds may be better suited to identifying undervalued targets and prompting a takeover, than at engaging in long-term corporate governance or operating issues.
Subjects
Series Statement
- Working paper / Division of Research, Harvard Business School -- 08-004
- Working paper (Harvard Business School. Division of Research) -- 08-004
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