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Hedge Fund Activism in Europe

47 Pages Posted: 9 Jun 2010  

Marco Becht

Solvay Brussels School of Economics and Management (ULB); European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

Julian R. Franks

London Business School; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Jeremy Grant

University of Cambridge

Date Written: May 26, 2010

Abstract

The paper analyzes 362 European activist interventions by hedge funds, focus funds and other activist investors from 2000 to 2008. The sample includes both public and private interventions. The private interventions are based upon proprietary data collected from five activist funds. For public interventions the disclosure of acquired stakes is associated with large positive abnormal returns across a number of jurisdictions. Private activism is extensive and profitable but less so than public activism, in large part because the incidence of takeovers is higher in public activism. The returns from hostile activist interventions are more profitable than co-operative ones, and returns for specialist activist funds are substantially larger than for other investors. After controlling for these factors legal jurisdiction does not explain differences in returns across countries.

Keywords: Shareholder Activism, Hedge Funds, Active Ownership, Institutional Investors

JEL Classification: G32

Suggested Citation

Becht, Marco and Franks, Julian R. and Grant, Jeremy, Hedge Fund Activism in Europe (May 26, 2010). ECGI - Finance Working Paper No. 283/2010. Available at SSRN: https://ssrn.com/abstract=1616340 or http://dx.doi.org/10.2139/ssrn.1616340

Marco Becht (Contact Author)

Solvay Brussels School of Economics and Management (ULB) ( email )

42 Avenue F. D. Roosevelt
1050
Brussels, 1050
Belgium
+32 2 6504466 (Phone)

HOME PAGE: http://www.solvay.edu/profile/marcobecht

European Corporate Governance Institute (ECGI) ( email )

Palace of the Academies
Rue Ducale 1 Hertogstraat
Brussels, 1000
Belgium

HOME PAGE: http://www.ecgi.org/members_directory/member.php?member_id=6

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Julian R. Franks

London Business School ( email )

Institute of Finance and Accounting
Sussex Place - Regent's Park
London NW1 4SA
United Kingdom
+44 20 7262 5050 x3449 (Phone)
+44 20 7724 3317 (Fax)

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Jeremy Grant

University of Cambridge ( email )

Trinity Ln
Cambridge, CB2 1TN
United Kingdom

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