Who Is Afraid of BlackRock?
93 Pages Posted: 9 Aug 2015 Last revised: 7 Dec 2018
Date Written: December 3, 2018
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: Suggested Citation