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
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, G32working papers series
Date posted: December 3, 2010 ; Last revised: December 10, 2012
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