Who Is Afraid of BlackRock?

74 Pages Posted: 9 Aug 2015 Last revised: 29 May 2016

See all articles by Massimo Massa

Massimo Massa

INSEAD - Finance

David Schumacher

McGill University

Yan Wang

McMaster University

Multiple version iconThere are 2 versions of this paper

Date Written: May 27, 2016


We use the merger of BlackRock with Barclays Global Investors to study how changes in ownership concentration affect the investment behavior of financial institutions and the cross-section of stocks worldwide. We find that other institutions begin avoiding stocks that experience a merger-related increase in ownership concentration. As a result, affected stocks experience a permanent and negative price, liquidity and volatility impact. We confirm these effects in a large sample of asset management mergers over a ten year period. The interpretation that institutions strategically avoid stocks with an elevated risk of future fragility enjoys the strongest support in the data.

Keywords: Strategic Interactions, Asset Management Merger, Liquidity, Limits to Arbitrage

JEL Classification: G11, G12, G14, G15, G23

Suggested Citation

Massa, Massimo and Schumacher, David and Wang, Yan, Who Is Afraid of BlackRock? (May 27, 2016). INSEAD Working Paper No. 2015/60/FIN. Available at SSRN: https://ssrn.com/abstract=2641078 or http://dx.doi.org/10.2139/ssrn.2641078

Massimo Massa

INSEAD - Finance ( email )

Boulevard de Constance
F-77305 Fontainebleau Cedex
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+33 1 6072 4045 (Fax)

David Schumacher (Contact Author)

McGill University ( email )

1001 Sherbrooke St. W
Montreal, Quebec H3A 1G5
5143984778 (Phone)

HOME PAGE: http://www.davidschumacher.info

Yan Wang

McMaster University ( email )

1280 Main Street West
Hamilton, Ontario L8S 4M4

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