TY - JOUR
T1 - Institutional Investors and Hedge Fund Activism
AU - Kedia, Simi
AU - Starks, Laura T.
AU - Wang, Xianjue
N1 - Publisher Copyright:
© 2021 The Author(s) 2021. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For permissions, please e-mail: journals.permissions@oup.com.
PY - 2021/3/1
Y1 - 2021/3/1
N2 - Hedge fund activists have ambiguous relationships with the institutional shareholders in their target firms. While some support their activities, others counter their actions. Due to their relatively small holdings in target firms, activists typically need the cooperation of other institutional shareholders that are willing to influence the activists' campaign success. We find the presence of "activism-friendly"institutions as owners is associated with an increased probability of being a target, higher long-term stock returns, and higher operating performance. Overall, we provide evidence suggesting the composition of a firm's ownership has significant effects on hedge fund activists' decisions and outcomes. (JEL: G13, G23, G34) Received March 12, 2020; editorial decision July 13, 2020 by Editor Andrew Ellul. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.
AB - Hedge fund activists have ambiguous relationships with the institutional shareholders in their target firms. While some support their activities, others counter their actions. Due to their relatively small holdings in target firms, activists typically need the cooperation of other institutional shareholders that are willing to influence the activists' campaign success. We find the presence of "activism-friendly"institutions as owners is associated with an increased probability of being a target, higher long-term stock returns, and higher operating performance. Overall, we provide evidence suggesting the composition of a firm's ownership has significant effects on hedge fund activists' decisions and outcomes. (JEL: G13, G23, G34) Received March 12, 2020; editorial decision July 13, 2020 by Editor Andrew Ellul. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.
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U2 - 10.1093/rcfs/cfaa027
DO - 10.1093/rcfs/cfaa027
M3 - Article
AN - SCOPUS:85105070093
SN - 2046-9128
VL - 10
SP - 1
EP - 43
JO - Review of Corporate Finance Studies
JF - Review of Corporate Finance Studies
IS - 1
ER -