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Wolf Pack ActivismAlon BravDuke University - Fuqua School of Business Amil DasguptaLondon School of Economics (LSE); Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI) Richmond D. MathewsUniversity of Maryland - Department of Finance May 12, 2015 Robert H. Smith School Research Paper No. RHS 2529230 Abstract: It is alleged that activist hedge funds congregate around a common target, with one acting as the "lead" activist and others as peripheral activists, or "wolf pack" members. We model this phenomenon as a coordination game, and show that the concentration of capital and skill matters: Holding constant total activist ownership, the presence of a lead activist increases the probability of successful activism due to improved coordination among activists. We model the dynamics of share acquisition by wolf pack members and the lead activist: Block acquisition by the lead activist spurs significant entry by wolf pack members, while the lead activist acquires only if the expected wolf pack is large enough. Finally, we provide predictions concerning which wolf pack activists will buy ahead of the lead activist, and which will wait to acquire until after the lead activist's stake is announced.
Number of Pages in PDF File: 31 Date posted: November 23, 2014 ; Last revised: May 13, 2015Suggested CitationContact Information
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