Intra-Industry Effects of Shareholder Activism in Germany - Is There a Difference between Hedge Fund and Private Equity Investments?
Schmalenbach Business Review, Vol. 63, pp. 151-185, April 2011
35 Pages Posted: 5 Jul 2011
Date Written: April 1, 2011
Abstract
We investigate the valuation effects of industry rivals on German firms targeted by hedge funds and private equity investors. We argue that both types of investors differ from other block holders due to their strong motivation and ability to actively engage and monitor. We find that the announcement of a change in ownership structure generates statistically significant short- and long-term intra-industry effects for rivals to the respective private equity and hedge fund targets. However, these effects differ markedly between hedge fund investments and private equity investments. We conclude that hedge funds are more aggressive than private equity investors in implementing a shareholder orientation.
Keywords: corporate governance, hedge fund, information signaling, intra-industry effects, private equity, rivals, shareholder activism
JEL Classification: G14, G32, G34
Suggested Citation: Suggested Citation
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