Blockholder Activism and Stock Price Information Quality

59 Pages Posted: 30 Jul 2018 Last revised: 20 Jan 2020

See all articles by Stephen Brown

Stephen Brown

New York University (NYU) - Leonard N. Stern School of Business

Elaine Hutson

Monash University - Dept of Banking and Finance; Financial Research Network (FIRN)

Michael Wang

Monash University - Department of Banking and Finance

Jin Yu

Monash University -Department of Banking and Finance

Date Written: 01 01, 2020

Abstract

Using an extensive blockholder dataset, we find that blockholder activism impairs various proxies of the information quality of stock prices. These effects are concentrated on blockholders who are hedge funds, individuals, or corporations who rely on their own capital to acquire block ownership and intend to improve corporate governance and firm performance. By contrast, those who are parent companies of target firms, or acquire their blocks through family bequests or gifts do not influence information quality. Our findings show that activism influences stock price information quality through uncertainty about activism outcomes and the market valuation of this activity.

Keywords: Blockholder activism; blockholder heterogeneity; Information environment; web crawler; textual analysis

JEL Classification: G12, G23, G34

Suggested Citation

Brown, Stephen and Hutson, Elaine and Wang, Michael and Yu, Jin, Blockholder Activism and Stock Price Information Quality (01 01, 2020). Available at SSRN: https://ssrn.com/abstract=3221936 or http://dx.doi.org/10.2139/ssrn.3221936

Stephen Brown

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

Elaine Hutson

Monash University - Dept of Banking and Finance ( email )

PO Box 197
Caulfield East, Victoria 3145
Australia
+61399032110 (Phone)

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Michael Wang (Contact Author)

Monash University - Department of Banking and Finance ( email )

Melbourne
Australia

Jin Yu

Monash University -Department of Banking and Finance ( email )

Melbourne
Australia
+61 3 99034590 (Phone)

HOME PAGE: http://sites.google.com/site/jinyufinecon/

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