Much Ado About Nothing: The Effects of Hedge Fund Activism in Germany

Drerup, Tilman H.

doi:10.2139/ssrn.1718365

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Much Ado About Nothing: The Effects of Hedge Fund Activism in Germany

Tilman H. Drerup

University of Bonn - The Bonn Graduate School of Economics

December 9, 2012

Abstract:
In this paper I analyze the effects of 278 instances of hedge fund sharehold- ings in German publicly listed companies between 1999 and 2010. Though I observe significantly positive stock market reactions when market participants learn about the existence of an activist hedge fund shareholder, I also find significantly negative returns in the following year, resulting in an overall zero effect. In addition, I document that there are no discernible hedge fund-induced changes in central corporate variables, e.g., in cash holdings, leverage or performance. The results suggest that the successes of ac- tivist hedge funds that have been observed for the US are not easily transferable to the German capital market.

Number of Pages in PDF File: 30

Keywords: Hedge Fund, Activism, Ownership, Corporate Governance

JEL Classification: G14, G23, G32

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Date posted: December 3, 2010 ; Last revised: December 10, 2012

Suggested Citation

Drerup, Tilman H., Much Ado About Nothing: The Effects of Hedge Fund Activism in Germany (December 9, 2012). Available at SSRN: http://ssrn.com/abstract=1718365 or http://dx.doi.org/10.2139/ssrn.1718365

Contact Information

Tilman H. Drerup (Contact Author)

University of Bonn - The Bonn Graduate School of Economics ( email )

Kaiserstr.1
Bonn, D-53113
Germany