Investor activism and takeovers

Recent work documents large positive abnormal returns when a hedge fund announces activist intentions regarding a publicly listed firm. We show that these returns are largely explained by the ability of activists to force target firms into a takeover. For a comprehensive sample of 13D filings by por...

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Bibliographic Details
Published inJournal of financial economics Vol. 92; no. 3; pp. 362 - 375
Main Authors Greenwood, Robin, Schor, Michael
Format Journal Article
LanguageEnglish
Published Amsterdam Elsevier B.V 01.06.2009
Elsevier
Elsevier Sequoia S.A
SeriesJournal of Financial Economics
Subjects
Abnormal returns
Acquisitions
Acquisitions & mergers
Activism
Activists
Corporate control
Event studies
Hedge funds
Investment trusts
Investor activism
Investor activism Event studies Hedge funds Corporate control
Investors
Portfolio analysis
Portfolio investments
SEC filing requirements
Shareholder activism
Stock returns
Studies
Take-overs
Target company
United States > US
Event studies
G32
Hedge funds
G34
G14
Corporate control
Investor activism
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Summary:Recent work documents large positive abnormal returns when a hedge fund announces activist intentions regarding a publicly listed firm. We show that these returns are largely explained by the ability of activists to force target firms into a takeover. For a comprehensive sample of 13D filings by portfolio investors between 1993 and 2006, announcement returns and long-term abnormal returns are high for targets that are ultimately acquired, but not detectably different from zero for firms that remain independent. Firms targeted by activists are more likely than control firms to get acquired. Finally, activist investors’ portfolios perform poorly during a period in which market wide takeover interest declined.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0304-405X
1879-2774
DOI:10.1016/j.jfineco.2008.05.005