The Value of Activism: A Hedge Fund Investor's Perspective

42 Pages Posted: 12 May 2018 Last revised: 1 Aug 2022

See all articles by Felix Zhiyu Feng

Felix Zhiyu Feng

University of Washington - Michael G. Foster School of Business

Chengdong Yin

Renmin University of China - School of Finance

Caroline Zhu

University of Oklahoma

Date Written: July 31, 2022

Abstract

This paper examines the value of hedge fund activism from the perspective of activist hedge funds’ investors. Different from previous studies, we compare the returns to an activist hedge fund’s holdings of intervention targets against its own non-target holdings. This enables us to evaluate the return to activism more precisely by controlling for the fund manager’s general investment skills. On average, an activist fund’s intervention targets do not perform differently from its non-target holdings. The targets do outperform, however, in the first month of intervention, especially if the fund has prior intervention experience or is familiar with the target industries.

Keywords: hedge fund, shareholder activism, portfolio analysis

JEL Classification: G23, G11, G14

Suggested Citation

Feng, Felix and Yin, Chengdong and Zhu, Caroline, The Value of Activism: A Hedge Fund Investor's Perspective (July 31, 2022). Available at SSRN: https://ssrn.com/abstract=3158826 or http://dx.doi.org/10.2139/ssrn.3158826

Felix Feng (Contact Author)

University of Washington - Michael G. Foster School of Business ( email )

Box 353200
Seattle, WA 98195-3200
United States

Chengdong Yin

Renmin University of China - School of Finance ( email )

Ming De Main Building
Renmin University of China
Beijing, Beijing 100872
China

Caroline Zhu

University of Oklahoma ( email )

307 W Brooks
Norman, OK 73019
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
369
Abstract Views
2,085
rank
114,038
PlumX Metrics