Who Is Afraid of BlackRock?

93 Pages Posted: 9 Aug 2015 Last revised: 7 Dec 2018

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: December 3, 2018

Abstract

We exploit the merger between BlackRock and Barclays Global Investors to study how changes in expected ownership concentration affect the investment behavior of funds and the cross-section of stocks worldwide. We find that funds with open-end structures and a large exposure to commonly-held stocks begin avoiding these stocks following the merger announcement. This leads to a permanent change in the composition of institutional ownership which has a negative price and liquidity impact. We confirm these results in a large sample of global asset management mergers. Our findings suggest that market participants act strategically in response to changes in expected financial fragility.

Keywords: Financial Fragility, Strategic Interactions, Asset Management Mergers

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

Suggested Citation

Massa, Massimo and Schumacher, David and Wang, Yan, Who Is Afraid of BlackRock? (December 3, 2018). 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
France
+33 1 6072 4481 (Phone)
+33 1 6072 4045 (Fax)

David Schumacher (Contact Author)

McGill University ( email )

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

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

Yan Wang

McMaster University ( email )

1280 Main Street West
Hamilton, Ontario L8S 4M4
Canada

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