Where Do Activist Shareholders Trade?

65 Pages Posted: 12 Dec 2018 Last revised: 15 Jun 2019

See all articles by Mao Ye

Mao Ye

University of Illinois at Urbana-Champaign; National Bureau of Economic Research (NBER)

Wei Zhu

University of Illinois at Urbana-Champaign - Department of Accountancy

Date Written: May 1, 2019

Abstract

Before intervening in corporate governance, an activist needs to acquire a large ownership in a firm, and her information is private until she files Schedule 13D. We analyze how this large informed trader chooses between the lit exchange and the dark pool. We find that (1) the market share of the dark pool increases when an activist trades, (2) dark pool’s market share increases more when the activist’s value of information is higher, and (3) price discovery ahead of a Schedule 13D filing decreases with the activist’s value of information and the historical market share of the dark pool.

Keywords: Shareholder activism, Schedule 13D filing, Dark pool, Rational expectation equilibrium

JEL Classification: G12, G34

Suggested Citation

Ye, Mao and Zhu, Wei, Where Do Activist Shareholders Trade? (May 1, 2019). Available at SSRN: https://ssrn.com/abstract=3292516 or http://dx.doi.org/10.2139/ssrn.3292516

Mao Ye (Contact Author)

University of Illinois at Urbana-Champaign ( email )

406 Wohlers
1206 South 6th Street
Champaign, IL 61820
United States
2172440474 (Phone)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Wei Zhu

University of Illinois at Urbana-Champaign - Department of Accountancy ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
99
Abstract Views
955
rank
263,512
PlumX Metrics